FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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 __________,19__ to ____________,19__.
Commission file Number: 0-14306
_______________________________
INTERCELL CORPORATION
_________________________________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 84-0928627
__________________________________ ____________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
Suite 250, 7201 East Camelback Road, Scottsdale, Arizona, 85251
__________________________________________________________________
(Address of principal executive offices)
(Zip code)
(602) 970-5500
__________________________________________________
(Registrant's telephone number, including area code)
E-160, 4455 East Camelback Road, Phoenix, Arizona 85018
_______________________________________________________________________________
(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 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
___ ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to filed by Section 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.
Yes No Not applicable X
___ ___ ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: As of
August 7, 1996, there were 13,373,791 shares of registrant's sole class of
common shares, 210,000 Series A preferred shares and 1,000 Series B preferred
shares outstanding.
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERCELL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND JULY 31, 1995
(Prepared Internally By Management)
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF OPERATIONS
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
INTERCELL CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 AND JULY 31, 1995
(Prepared internally by management)
<CAPTION>
06-30-96 07-31-95
________ ________
ASSETS
______
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 793,183 $ 210,259
Accounts receivable 689,819 611,180
Inventory 890,403 808,498
Prepaid expenses 61,118 149,889
------- -------
2,434,523 1,779,826
Equipment held for sale 250,000 250,000
Property, plant and equipment, net 2,245,995 958,659
Research and development 37,663 -
Intangible assets 387,527 387,527
--------- ---------
$ 5,355,708 $ 3,376,012
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Current liabilities:
Loan payable to bank $ 528,079 $ -
Accounts payable and
accrued liabilities 533,040 591,356
Notes payable 864,627 535,731
------- -------
1,925,746 1,127,087
Long term debt - 50,529
--------- ---------
Total liabilities 1,925,746 1,177,616
--------- ---------
Stockholders' equity:
Preferred stock, Series A,
210,000 shares authorized
and issued at a stated value of
$10.00 per share 250,000 250,000
Common stock, no par value
100,000,000 shares authorized
13,373,791 issued and outstanding 5,584,854 3,108,543
Retained earnings (deficit) (2,404,892) (1,160,147)
--------- ---------
Total stockholders' equity 3,429,962 2,198,396
--------- ---------
$ 5,355,708 $ 3,376,012
========= =========
</TABLE>
<PAGE>
<TABLE>
INTERCELL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND
THE NINE MONTHS ENDED JULY 31,1995 AND 1994
(Prepared internally by management)
<CAPTION>
Nine Months Ended Nine Months Ended
June 30, 1996 July 31
_____________ _______
1995 1994
____ ____
<S> <C> <C> <C>
Sales (net of returns) $ 2,625,514 $ 2,884,525 $ 1,011,878
Cost of goods sold 1,966,565 1,655,884 714,296
--------- --------- ---------
Gross profit 658,949 1,228,641 297,582
Selling, general and administrative
expenses 940,044 734,230 724,165
--------- --------- ---------
Operating income (loss) ( 281,095) 494,411 ( 426,583)
--------- --------- ---------
Other income (expense)
Interest expense ( 84,302) ( 53,041) ( 1,643)
Gain (loss) on investments 97,325 ( 785,226) -
--------- --------- ---------
Loss for the period $( 268,072) $( 343,856) $( 428,226)
Net loss per share $(0.023) $(0.059) $(0.126)
===== ===== =====
Weighted average number of common
shares outstanding 11,695,417 5,831,507 3,385,905
========== ========= =========
</TABLE>
<PAGE>
<TABLE>
INTERCELL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND
THE NINE MONTHS ENDED JULY 31, 1995
(Prepared internally by management)
<CAPTION>
06-30-96 07-31-95
________ ________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $( 268,073) $( 343,856)
Gain on sale of property, plant
and equipment ( 88,717) -
Loss on investments - 578,865
Increase in accounts receivable ( 52,886) ( 141,563)
Increase in inventory ( 117,646) ( 310,963)
Decrease in prepaid expenses 18,136 ( 38,250)
Increase in current liabilities 126,350 ( 493,708)
--------- ---------
Net cash provided by operating activities ( 382,836) ( 749,475)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (1,444,804) ( 30,896)
Acquisition of equipment held for sale - ( 250,000)
Research and development ( 37,663) -
Proceeds on sale of property,plant and equipment 172,570 -
--------- ---------
(1,309,897) ( 280,896)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Share capital issued 2,476,311 819,938
Mortgage payable ( 47,810) -
Loan from shareholder - -
--------- ---------
2,428,501 819,938
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 735,768 ( 210,433)
CASH AND CASH EQUIVALENTS AT START OF PERIOD 57,415 420,692
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 793,183 $ 210,259
========= =========
</TABLE>
<PAGE>
INTERCELL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Prepared Internally By Management)
Basis of Presentation
_____________________
The consolidated balance sheet as of June 30, 1996 and the consolidated
statements of operations and cash flows for the nine months ended
June 30, 1996 have been prepared by the Company without audit. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at June 30, 1996 and for all periods presented have
been made.
In accordance with the Agreement and Plan of Reorganization entered into by and
between the Company and Modern Industries, Inc. (see Note 1), the Company
issued 5,412,191 common shares to Modern, representing approximately 52% of the
10,409,244 shares of the Company outstanding on completion of the transaction.
Modern was therefore deemed to be the acquiring company in this transaction and
accordingly reverse takeover accounting principles have been applied in the
preparation of these financial statements. In addition, the financial
statement for the nine month period ended July 31, 1994 reflects the
consolidated results of operations of Modern Industries, Inc.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principals have been condensed or omitted as permitted by
the rules and regulations of the Securities and Exchange Commission.
While the Company believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these
financial statements be read in conjunction with the September 30, 1995
financial statements of Intercell Corporation, the notes thereto and the
Independent Auditors' Report thereon.
1. Nature of Operations and Summary of Significant Accounting Policies
General
_______
Intercell Corporation (the Company or Intercell) was incorporated under
the laws of Colorado on October 4, 1983, and was previously engaged in
the sale of business and cellular telephone equipment. This business was
abandoned and all remaining assets liquidated or otherwise abandoned
during 1991, with all obligations being paid or otherwise satisfied.
Beginning in July, 1992, the Company adopted a business plan to take
advantage of new investment opportunities.
Acquisition of the Assets and Liabilities of Modern Industries Inc.
___________________________________________________________________
An Agreement and Plan of Reorganization dated July 7, 1995 was entered
into between the Company and Modern Industries, Inc. (Modern). The
Company issued 5,412,191 shares of common stock to Modern in exchange
for all of the assets and liabilities of Modern and its wholly owned
subsidiary, California Tube Laboratory, Inc. (CTL).
The 5,412,191 shares issued to Modern represented approximately 52% of the
Company's outstanding stock upon completion of the transaction. As such,
the transaction was accounted for as a purchase of Intercell Corporation
by Modern. Accordingly, the assets of Intercell have been recorded at
their fair market value at the date of acquisition and Intercell's results
of operations have been included in these consolidated financial
statements since the date of acquisition.
Modern Industries, Inc.
_______________________
Modern was incorporated in the state of Delaware on April 16, 1991 for the
purpose of merging with Mamba Corporation (Mamba), a company incorporated
in the state of Texas on November 9, 1987. Mamba was organized primarily
for the purpose of raising capital to take advantage of domestic and
foreign business investment opportunities. On May 1, 1991, Mamba merged
with Modern, with each 112 shares of the issued and outstanding common
stock of Mamba being converted into 1 share of common stock of Modern.
Mamba ceased to exist as a corporate entity, with the surviving entity
being Modern.
On June 22, 1993, Modern formed a wholly owned subsidiary named Modern
Resources, Inc. (MRI), a New Mexico corporation. The purpose of MRI was
to allow Modern to conduct business in the state of New Mexico and to
develop mining resources in that state. During the 1995 fiscal year,
the operations of MRI were terminated and all assets and liabilities
of MRI were assumed by Modern.
Purchase of California Tube Laboratory, Inc.
____________________________________________
Effective May 1, 1994, Modern acquired all of the issued and outstanding
shares of CTL for 762,031 shares of its common stock (valued at
$1,069,140) and notes payable to two major stockholders of CTL for
$955,860. As of June 30, 1996, the amounts due to the major stockholders
had been reduced to $497,877. Subsequent to June 30, 1996, these amounts
were paid in full.
In addition to the above, Modern bought out an employment contract with a
former owner of CTL for 222,572 shares of Modern common stock (valued at
$312,272).
CTL began operations in 1949 under the laws of the state of California.
CTL is in the electronic parts and repair business. CTL manufactures and
rebuilds magnetrons, klystrons, high power triodes and tetrodes, electron
guns and linear acccelerators for customers primarily in the United States.
Formation of Arizcan Properties, Ltd.
_____________________________________
Arizcan Properties, Ltd., an Arizona corporation, was formed in the period
for the purpose of acquiring a development property on which to establish
Intercell's manufacturing operations. Intercell is the sole shareholder
of Arizcan.
2. Significant Accounting Policies
Principles of Consolidation
___________________________
These consolidated financial statements include all of the assets and
liabilities of the parent company, Intercell Corporation, as well as those
of California Tube Laboratory, Inc. and Arizcan Properties, Ltd. All
intercompany transactions, accounts and balances have been eliminated
on consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting. Actual results could differ from those estimates.
Revenue Recognition
___________________
The accounting records of the Company and its financial statements are
maintained and presented on the accrual basis. Revenues are recognized
when earned, generally on shipment. Provision is made for estimated
customer returns and warranty costs at the time of sale.
Inventories
___________
Raw materials inventories are stated at the lower of cost (first in, first
out) or market. For CTL, the manufacture of new tubes is done on a
standard cost basis with the costs of raw materials, labor and overheads
adjusted periodically when costs change. Each tube repair is unique and
is costed out on a specific item basis with costs accumulated as incurred.
Tubes rebuilt for the U.S. government follow governmental cost allocation
guidelines.
Property, Plant and Equipment
_____________________________
Property, plant and equipment is stated at cost. Depreciation is provided
by use of accelerated and straight-line methods over the estimated useful
lives of the assets, generally 5 to 12 years for furniture and equipment
and 40 years for the condominium.
Intangibles
___________
Propriety technology, trade names and other intangibles are carried at
cost less accumulated amortization which is calculated on a straight-line
basis over 15 years. The recoverability of carrying values of intangible
assets is evaluated on a recurring basis.
3. Property, Plant and Equipment
Intercell Corporation
_____________________
On December 29, 1994, the Company acquired certain assets consisting of
microwave transmission and associated support equipment, in exchange for
210,000 shares of Series A redeemable, convertible preferred stock.
As of June 30, 1996, the microwave equipment is held for sale. The
equipment and the associated preferred shares issued to acquire the
equipment were valued at $250,000 at September 30, 1995, management's
estimate of the minimum realizable value to be received on a sale of this
equipment.
California Tube Laboratory, Inc.
________________________________
The equipment of California Tube Laboratory, Inc. is highly specialized
and was either purchased or built on location to assist in tube repair or
manufacture. Much of the purchased equipment has also been modified to
fulfill the specific needs of CTL. The internally built equipment costs
were accumulated and capitalized.
Cost
----
Furniture and fixtures $ 86,199
Equipment and machinery 449,752
Vehicle 7,335
---------
543,286
Accumulated depreciation 437,882
---------
$ 105,404
=========
Arizcan Properties, Ltd.
________________________
On March 13, 1996, Arizcan Properties, Ltd. a wholly-owned subsidiary of
Intercell Corporation, entered into an agreement to acquire a 94 acre
development property located in Pinal County, Arizona for a total purchase
price of $1,429,362. This transaction closed on June 18, 1996. In
consideration, Intercell issued 400,000 common shares at an agreed value
of $2.50 per share, and made cash payments of $62,612. Arizcan assumed
first and second mortgages on the property totaling $366,750. This
property was acquired with the intention of establishing manufacturing
operations for the Company's cellular phone technology. However,
subsequent to June 30, 1996, the Company entered into an agreement to
acquire an established manufacturer of electrical components. The
property has therefore became redundant to the Company's operations, and
will be disposed of at the earliest opportunity.
4. Advances to Interpretel
The Company acquired Modern Industries, Inc.'s interest in a $100,000 cash
advance to Interpretel, Inc. This advance, is repayable by cash in the
amount of $45,000 (paid) and 100,000 shares of Wavetech, Inc.
5. Notes Payable
As of June 30, 1996, the Company had an outstanding promissory note
payable in the principle amount of $497,877. Subsequent to June 30, 1996,
this note was paid in full.
6. Long Term Debt
The Company had a long term debt commitment which was a mortgage on a
condominium owned by CTL. This mortgage was paid in full on the sale of
the condominium in the quarter ended June 30, 1996.
On the acquisition of the development property by Arizcan Properties,
Ltd., mortgages totaling $366,750 were assumed. These mortgages were
paid in full on the completion of the financing disclosed in note 7.
7. Subsequent Events
On July 10, 1996, the Company completed a private placement of 1,000
shares of its Series B Preferred Stock for total proceeds of $10,000,000.
These funds will be used primarily for the repayment of liabilities,
planned strategic acquisitions, the completion of product development and
commercialization, the expansion of production capabilities and general
working capital.
The Series B Preferred Stock carries a premium of 10% per annum payable at
the time of conversion or redemption of the shares. The Preferred Stock
is convertible into common stock at the option of the holder at a rate
determined by the average trading price of the Company's common stock at
the time of conversion, but not to exceed $3.975 per share, and is
automatically converted into Intercell common shares in three years.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
On July 7, 1995, the Company entered into an Agreement and Plan of
Reorganization pursuant to Section 368(a)(1)(C) of the Internal Revenue Code of
1986 with Modern Industries, Inc. a Delaware corporation. The Company issued
Five Million Four Hundred Twelve Thousand One Hundred Ninety One (5,412,191)
restricted common shares out of its authorized but unissued capital to Modern
Industries, Inc., in exchange for all of the assets and liabilities of Modern
Industries, Inc. and its wholly owned subsidiary, California Tube Laboratory,
Inc. The transaction was approved under Delaware law, by the consent of
persons holding more than a majority of the voting power of the outstanding
common stock of Modern Industries, Inc. Pursuant to the Agreement, Modern
Industries, Inc. agreed and convenanted not to make any distribution of the
securities acquired from the Company on or before one (1) year from the date of
the transaction. Such distribution will be registered, on the appropriate
form, with the Securities and Exchange Commission prior to distribution.
The issuance of Five Million Four Hundred Twelve Thousand One Hundred
Ninety One (5,412,191) shares by the Company to Modern Industries, Inc.
represents approximately Fifty Two (52%) percent of the Ten Million Four
Hundred Nine Thousand Two Hundred Forty Four (10,409,244) shares of the Company
outstanding upon completion of the transaction.
California Tube Laboratory, Inc.
________________________________
Pursuant to the Agreement and Plan of Reorganization, the Company acquired
certain leaseholds, equipment and other physical property located at the
principal executive offices and plant facilities of California Tube Laboratory,
Inc.(CTL), located in Santa Cruz, California. CTL is engaged in manufacturing
and rebuilding electron power tubes.
In order to increase production capacity and expand on its existing
product lines, CTL entered into an agreement for the construction of a 21,600
square foot manufacturing facility located in the City of Watsonville. It is
anticipated that construction will be completed in the fourth quarter of 1996,
and that CTL will move its operations from Santa Cruz to Watsonville at that
time. In conjunction with the move to its new facilities, CTL is currently
recruiting additional engineering and marketing personnel.
Research Agreement - Arizona State University
_____________________________________________
On December 14, 1995, the Company entered into a research agreement with
Arizona State University for the development and testing of a cellular phone
antenna designed to: 1) minimize radiation towards the user, thereby reducing
the potential health hazard that may be associated with exposure to
electromagnetic signals; 2) maintain the electrical performance of the antenna
and range of the cellular phone; 3) minimize the size of the antenna to comport
with the trend in today's user electronics; and 4) address the technical
problems associated with the manufacture of cellular phones utilizing the
antenna.
During the quarter ended June 30, 1996, the Company filed a patent
application for its internal cellular telephone antenna, while continuing
development and laboratory and field testing of both an internal and external
antenna. The Company anticipates that it will commence production and
marketing of the external antenna in the fourth quarter of the 1996 calendar
year.
Equipment Held For Resale
_________________________
During fiscal 1994 and prior to the acquisition of the assets and
liabilities of Modern Industries, Inc. referred to above, the Company had
devoted its efforts towards the telecommunications industry. On March 30,
1994, the Company consummated an Asset Purchase Agreement with Asia Skylink
Corporation, which resulted in the acquisition of certain assets by the
Company. These assets are comprised of microwave transmission and associated
support equipment. The Company initially intended to use these assets to
provide video and data transmission facilities on a private basis within the
Denver metropolitan area and the surrounding front range region. However, the
Company is presently reviewing opportunities for the disposition of this
equipment.
Liquidity
On the acquisition of the assets and liabilities of Modern Industries,
Inc., the Company commenced financing its operations from the cash flow of
California Tube Laboratory, Inc. To supplement this cash flow, the Company
arranged for bank financing in the form of a line of credit, term loans and a
capital expenditure loan facility. At June 30, 1996, these loans totaled
$528,079. Working capital at June 30, 1996 totaled $508,777.
Subsequent to June 30, 1996, the Company completed a $10,000,000 private
placement of Series B Preferred Shares. These funds will be used primarily
for the repayment of liabilities, planned strategic acquisitions, the
completion of product development and commercialization, the expansion of
production capabilities and general working capital. In this regard, the
Company repaid the bank financing referred to above, paid off mortgages related
to the development property acquired in the period, and repaid the note
payable to the former owner of California Tube Laboratory, Inc. With the
repayment of these liabilities, the Company has no debt other than current
trade liabilities, and has cash and cash equivalents on hand of approximately
$8,200,000 at August 11, 1996.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
No material legal proceedings (other than routine litigation
incidental to the business) to which the Company (or any officer or director of
the Company, or any affilate or owner of record or beneficially of more than
five percent of the Common Stock, to management's knowledge) is a party or to
which the property of the Company is subject is pending and no such material
proceedings is known by managment of the Company to be contemplated.
Previously, however, certain litigation was initiated prior to the period
covered by this report by the former President of the Company, William B.
Fulks. The complaint was filed in District Court, Montezuma County, Colorado,
on August 9, 1990. The complaint alleges that Mr. Fulks was owed $5,777.78 in
unpaid salary at the time of his resignation, and futher alleges he is owed
$2,888.89 as a penalty for the failure by the Company to pay the unclaimed
salary. The Company settled this matter subsequent to June 30, 1996 through
payment of $7,500.
Item 2. Changes in Securities.
During the period covered by and to the date of this report, none of
the constituent instruments defining the rights of the holders of any class
of registered securities have been materially modified, and further, none of
the rights evidence by any class of registered securities have been materially
limited or qualified in any manner.
Item 3. Defaults Upon Senior Securities.
The Company had no class of senior securities outstanding during the
period covered by or to the date of this report.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted by the Company to its security holders
during the fiscal period covered by this report.
Item 5. Other Information.
The Form 10-K of the Company for the year ended March 31, 1994, under
"Item 5. Market for Registrant's Common Equity and Related Stockholder Matters-
Outstanding Shares and Shareholders of Record" incorrectly reported 210 shares
of preferred stock outstanding. This number should have been 210,000 shares.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 27. Financial Data Schedule
(b) Reports:
Form 8-K dated July 7, 1995 disclosed the change of control of
the Company and the acquisition of the assets and liabilities of
Modern Industries, Inc. as discussed above.
Form 8-K dated December 4, 1995 disclosed the dismissal of
Halliburton, Hunter & Associates, P.C. and the engagement of
KPMG Peat Marwick, L.L.P. as the Company's new principal
independent accountants, effective December 4, 1995.
Form S-8 dated January 24, 1996 disclosed details of the
Company's 1995 Compensatory Stock Option Plan and the
registration of 3,581,160 Common Shares of the Company issuable
under this plan.
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.
INTERCELL CORPORATION
(Registrant)
/s/ Gordon Sales
By: Gordon Sales
President and Chief
Executive Officer
Dated: August 12, 1996
/s/ Alan Smith
By: Alan Smith
Secretary and Chief
Financial Officer
Dated: August 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 793,183
<SECURITIES> 0
<RECEIVABLES> 689,819
<ALLOWANCES> 0
<INVENTORY> 890,403
<CURRENT-ASSETS> 2,434,523
<PP&E> 2,683,877
<DEPRECIATION> 437,882
<TOTAL-ASSETS> 5,355,708
<CURRENT-LIABILITIES> 1,925,746
<BONDS> 0
<COMMON> 5,584,854
0
250,000
<OTHER-SE> (2,404,892)
<TOTAL-LIABILITY-AND-EQUITY> 5,355,708
<SALES> 2,625,514
<TOTAL-REVENUES> 2,625,514
<CGS> 1,966,565
<TOTAL-COSTS> 1,966,565
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,302
<INCOME-PRETAX> ( 268,072)
<INCOME-TAX> 0
<INCOME-CONTINUING> ( 268,072)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ( 268,072)
<EPS-PRIMARY> ( .02)
<EPS-DILUTED> ( .02)
</TABLE>
