<PAGE> 1
FORM 10-Q
UNITED STATES
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 September 30, 1995
( ) 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 0-16343
OIS OPTICAL IMAGING SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-2544320
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
47050 Five Mile Road, Northville, Michigan 48167
- ------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 454-5560
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of November 9, 1995:
<TABLE>
<CAPTION>
Common Stock, $0.01 par value 96,723,284
- -------------------------------- ------------------
<S> <C>
Class Number of shares
</TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
Financial Statements
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended September 30,
--------------------------
1995 1994
------------- ------------
<S> <C> <C>
REVENUES
Display revenue $ 1,071,125 $ 231,115
Engineering revenue 1,027,844 2,058,829
Sensor revenue 42,924 68,852
--------- ----------
TOTAL REVENUES 2,141,893 2,358,796
Cost of sales 5,345,652 3,430,568
---------- ---------
GROSS MARGIN (3,203,759) (1,071,772)
OPERATING EXPENSES
Internal research and development 529,370 322,209
Selling, general and administrative 1,139,431 839,834
----------- ----------
OPERATING LOSS (4,872,560) (2,233,815)
OTHER (INCOME) AND EXPENSE
Other (substantially all interest) 235,035 (22,179)
-------------- ------
NET LOSS $(5,107,595) $(2,211,636)
========== ==========
Preferred stock dividends 267,123 --
------------ ---------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $(5,374,718) $(2,211,636)
=========== ===========
NET LOSS PER COMMON SHARE (Note B) $(.06) $(.07)
==== ====
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 272,420 $ 495,854
Cash-restricted 340,299 334,227
Accounts receivable 2,295,593 2,097,024
(Net reserve for doubtful accounts of $60,000
at September 30, 1995 and June 30, 1995)
Receivable from U.S. Government 3,405,003 2,584,117
Inventory 3,318,579 3,360,062
Prepaid expenses 420,802 299,605
Insurance receivable 2,209,513 2,277,385
Other current assets 76,685 80,560
-------------- -----------
TOTAL CURRENT ASSETS 12,338,894 11,528,834
PROPERTY, PLANT AND EQUIPMENT
Land 3,000,000 3,000,000
Building 10,000,000 --
Leasehold improvements 1,037,010 1,037,010
Machinery and other equipment 9,345,279 9,105,373
Capitalized leases - equipment 365,000 365,000
Construction in process 31,074,763 39,339,490
------------ ----------
54,822,052 52,846,873
Less accumulated depreciation and
amortization (7,447,328) (7,111,928)
---------- ----------
NET TOTAL PROPERTY AND EQUIPMENT 47,374,724 45,734,945
TOTAL ASSETS $59,713,618 $57,263,779
========== ==========
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Current installments on capital lease obligation $ 121,633 $ 121,633
Accounts payable 1,855,207 4,178,305
Accrued liabilities 2,072,046 1,690,709
Deferred revenue 282,334 326,954
------------ ----------
TOTAL CURRENT LIABILITIES 4,331,220 6,317,601
LONG-TERM DEBT 43,500,000 40,000,000
LOCAL GOVERNMENT SUBSIDY 3,000,000 3,000,000
CAPITAL LEASE OBLIGATION 95,399 125,454
----------- ----------
TOTAL LIABILITIES 50,926,619 49,443,055
STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.01 per share:
Series A, 8% cumulative, non-convertible
and non-voting
Authorized - 25,000 shares
Issued and outstanding - 18,750 shares
at September 30, 1995 and 12,500 shares at June 30, 1995 187 125
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 96,722,084 shares
at September 30, 1995 and 96,712,931 at June 30, 1995 967,221 967,129
Additional paid-in capital 87,604,294 81,325,112
Accumulated deficit (79,513,108) (74,138,390)
Deferred compensation ( 271,595) (333,252)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 8,786,999 7,820,724
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 59,713,618 $ 57,263,779
============ ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 5
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1995 1994
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,107,595) $(2,211,636)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 335,400 310,584
Deferred compensation expense 61,657 56,231
Impact on cash flows from changes in
assets and liabilities:
Accounts receivable (1,028,267) 298,775
Prepaid expenses and other (40,637) (115,156)
Inventory 41,483 (433,304)
Accounts payable and accrued expenses (2,208,865) (4,950,201)
Deferred revenues (44,620) (571,795)
---------- -----------
NET CASH USED IN
OPERATING ACTIVITIES ( 7,991,444) (7,616,502)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 1,975,179) (7,740,084)
-------------- -----------
NET CASH USED IN INVESTING
ACTIVITIES (1,975,179) (7,740,084)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (30,055) (69,720)
Net proceeds from line of credit 3,500,000 11,000,000
Net proceeds from issuance of common stock 29,316 170,801
Net proceeds from issuance of preferred stock 6,250,000 --
------------ -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 9,749,261 11,101,081
------------ ----------
DECREASE IN CASH AND CASH
EQUIVALENTS (217,362) (4,255,505)
NET CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 830,081 4,447,069
--------- -----------
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 612,719 $ 191,564
========= ===========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
------------ ------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $288,532 $3,502
Cash equivalents:
Cash equivalents consist of investments in short-term, highly-liquid securities having maturity of three months
or less, made as a part of OIS' cash management activity.
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTIONS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
---------- -----------
<S> <C> <C>
Accrual of Preferred Stock Dividends $267,123
Capitalization of equipment pursuant
to capital lease obligation 365,000
</TABLE>
See statements of cash flows.
-6-
<PAGE> 7
OIS OPTICAL IMAGING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - Financial Statement Presentation
The condensed financial statements included herein have been prepared by OIS
Optical Imaging Systems, Inc. ("the Company") without audit pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statement be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's latest annual report on Form 10-K.
There have been no significant changes in such information since the date of
such financial statements except as noted below.
In the opinion of the Company, the accompanying unaudited condensed financial
statements include all adjustments consisting only of normal recurring items,
required to present fairly its financial position as of September 30, 1995 and
June 30, 1995, the results of operations for the three months ended September
30, 1995 and 1994 and cash flows for the three months ended September 30, 1995
and 1994.
NOTE B - Net Loss Per Share
Net loss per share is based on the weighted average number of shares of Common
Stock outstanding during the periods. The weighted average number of shares
used in the computation for the three months ended September 30, 1995 and 1994
was 96,718,181 and 30,827,361, respectively.
Guardian Industries Corp. exercised its option to purchase additional shares of
common stock on November 26, 1994 at which time the Company issued
approximately 41,900,000 shares to Guardian and approximately 23,900,000 shares
to William Davidson. Guardian had irrevocably committed to such exercise as of
June 30, 1994. If these shares had been issued on June 30, 1994, the loss per
share for the three months ended September 30, 1994 would have been $.02 per
share based on weighted average number of approximately 96,600,000 shares.
NOTE C - Reclassification
Certain amounts in the prior year financial statements have been reclassified
to conform with the current financial presentation.
-7-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATION
Summary
The operating results for the first quarter of fiscal 1995 continue to
reflect decreased total revenues, increased costs and increased losses. The
growth in sales of displays continues to be limited until the Company's new
Northville facility has completed start-up. The Company continues to restrict
customer-funded engineering activity in favor of the sale of standard displays.
The Company has made progress in addressing the manufacturing problems at its
Troy facility, which are discussed below under Cost of Sales. These problems,
however, together with the increased personnel and maintenance costs associated
with the start-up of the Company's new production facility in Northville,
continued to result in significantly higher costs and losses in the first
quarter of fiscal 1996.
The Company is satisfied with the progress that it has made in attempting to
resolve its manufacturing problems while transferring manufacturing operations
from Troy to the new Northville facility. The Company continues to
simultaneously attempt to solve the manufacturing problems, start up the new
building and increase its level of product orders. Management does not expect
improved financial results in fiscal 1996, but does expect the results of the
Company's efforts in fiscal 1996 to determine whether the Company's cost of
sales and overall operating results can improve in the following fiscal years.
The start-up of the Northville facility is progressing as anticipated. The
first pre-production glass cells were completed in early October and functioned
as anticipated. The next set of pre-production glass cells are scheduled for
production in November 1995. Although the start-up of a facility with this
level of complexity is inherently an uncertain process, there has been steady
progress to date. Management expects to be better able to evaluate the
progress of the start-up in early calendar 1996.
Three Months ended September 30, 1995 and 1994.
REVENUES
Total revenue for the first three months of fiscal 1996 of $2,141,893 was 9%
lower than total revenue for the first quarter in fiscal 1995 of $2,358,796.
Revenue from the sale of displays for the first quarter of fiscal 1996 of
approximately $1,071,000 was 363% higher than revenues from the sale of
displays for the first quarter of fiscal 1995 of approximately $231,000.
Revenue from customer-funded engineering and development activities for the
first quarter of fiscal 1996 was 50% lower than for the first quarter of fiscal
1995. Significant additional display revenue will be necessary if the Company
is to achieve profitability. Until management gains additional confidence in
the start-up schedule for, and the performance of, the Northville facility, the
Company is limiting additional orders for delivery in fiscal 1996. Unless it
is possible to ease those limitations based on the performance of the
Northville facility in early calendar year 1996, revenue growth will be
constrained. Management is working closely with customers and will review the
status of the Northville facility on a continuous basis. While management
expects the level of
-8-
<PAGE> 9
demand for the Company's displays to increase in the future, it continues to
be uncertain as to the rate at which activity in the commercial and military
avionics market segment will increase. The rate of increase depends on how
quickly AMLCDs are deployed into new products and applications, and is
uncertain. The Company is attempting to increase its sales in the military and
avionics market segment and to work with potential customers on other
applications for displays in fiscal 1996. If these efforts and the start-up of
the new facility are successful, the Company's revenues could increase
materially in fiscal 1997 and thereafter. There has been significant marketing
activity in recent months, but it is not yet clear whether the Company's sales
and marketing efforts and the start-up of the Northville facility will be
successful.
The Company is continuing to deliver displays to customers, and customers have
reported that they are pleased with the quality and performance of the
Company's products.
COST OF SALES
Cost of sales for the first quarter of fiscal 1996 of $5,345,652 was 56% higher
than cost of sales for the first quarter of fiscal 1995 of $3,430,568.
Furthermore, the cost of sales as a percentage of revenue increased to 250% in
the first quarter of fiscal 1996 from 145% for the same period in the preceding
fiscal year.
The Company continues to experience manufacturing problems at the Troy
facility. A number of these problems have been addressed and solved. Some of
the problems, however, are inherent in the Troy facility, which was designed
for research and development rather than volume manufacturing, and are expected
to be resolved when all manufacturing is transferred to the new Northville
facility. The Company continues to address problems in its manufacturing
processes, and has appointed a new General Manager of Manufacturing Operations
and a new manager of the final manufacturing assembly and testing area. In
addition, the Company has secured assistance and advice from outside sources.
Management is satisfied with the progress that has been made to date and is
optimistic about the performance of the Northville facility. However, it will
not be possible to know the results of the Company's efforts until the start-up
process is completed, which is expected to be in the third quarter of fiscal
1996.
Management expects that the Company's production capability will increase
significantly once the transfer of production from the Troy facility to the
Northville facility is complete, assuming that the Northville facility operates
successfully. This is expected to occur sometime in the second half of fiscal
1996.
OTHER COSTS
The Company's internal research and development costs of $529,370 for the first
quarter of fiscal 1996 were 64% higher than the internal research and
development costs of $322,209 incurred during the first quarter of fiscal 1995.
The Company continues to commit additional resources to increasing its standard
product line, improving current products, improving the Company's technical
position and protecting the Company's intellectual property rights. Management
expects to incur internal research and development costs in fiscal 1996 and
thereafter at higher levels than in fiscal 1995.
The Company's Selling, General and Administrative costs of $1,139,431 for the
first quarter of fiscal 1996 were 36% higher than the Selling, General and
Administrative costs of $839,834
-9-
<PAGE> 10
incurred during the first quarter of fiscal 1995. The increase can be
attributed to the Company expanding its marketing and administrative
organization to manage the current and anticipated increases in markets and
general business activity. Furthermore, legal and consulting fees relating to
the administration and performance of government contracts increased.
Interest expense increased approximately $300,000 due to a portion of the new
plant being placed into service, with the consequence that a proportionate
amount of the interest incurred on the debt to finance construction of the
Northville facility is no longer being capitalized as part of the cost of the
facility. The Company also incurred additional interest on higher debt levels
to finance ongoing operations when compared to the first quarter of fiscal
1995. Interest expense will continue to increase at an accelerated rate
throughout fiscal 1996 as the new plant is completed. The capitalization of
interest will be completed by the end of fiscal 1996 and thereafter all of the
Company's interest expense will be treated as a period cost.
Liquidity and Capital Resources
The Company's cash and cash equivalents at September 30, 1995 was $612,719, of
which $340,299 consisted of funds provided by the Advanced Research Projects
Agency (ARPA) under the Company's agreement with ARPA relating to the
Northville facility. The Company uses ARPA funds solely for the purchase of
manufacturing equipment for the new facility and not for continuing operations.
The Company is attempting to manage its cash to minimize borrowings under its
$52.5 million commercial credit facility. See Financing Activities.
OPERATING ACTIVITIES
During the first three months of fiscal 1996, the Company incurred a net loss
of $5,107,595. Accounts Receivable increased by approximately $1 million due
to equipment procured in connection with the ARPA agreement which is expected
to be reimbursed in fiscal 1996. Accounts payable and accrued expenses
decreased approximately $2.2 million due to the timing of payment of invoices
relating to construction of the new facility.
INVESTING ACTIVITIES
During the first quarter of fiscal 1996, the Company spent approximately $2
million for production equipment and start-up costs relating to the Northville
facility.
FINANCING ACTIVITIES
During the first quarter of fiscal 1996, the Company received $6.25 million
from the sale of preferred stock to Guardian Industries Corp. and borrowed $3.5
million under its $52.5 million credit facility with NBD Bank N.A. and Bank of
America NT&SA. Guardian purchased an additional $6.25 million of preferred
stock on November 13, 1995. As of September 30, 1995, the Company's aggregate
borrowings under its commercial credit facility were $43.5 million. As of
November 10, 1995, the Company's aggregate borrowings under its commercial
credit facility were $49 million.
-10-
<PAGE> 11
The Company's liquidity is decreasing, but management does not anticipate a
need for additional cash beyond that available under its current line of
credit during fiscal 1996. However, the Company may require additional
equity during fiscal 1996 to meet the net worth covenant in its commercial
credit agreement, which requires that the Company maintain a net worth of at
least $5 million. See Capital Resources.
Capital Resources
The Company has financed the cost of the Northville manufacturing facility and
provided working capital through the current period. The cost of the
manufacturing facility is currently anticipated to be $102.3 million, which is
slightly over the original estimate of $101.5 million. Approximately 90% of
the costs have been committed and the plant is scheduled for final completion
during the current fiscal year.
Due to the level of current and anticipated losses, management expects
additional capital resources will be needed to support the Company's
operations. In September 1995, Guardian Industries purchased $6.25 million in
preferred stock on the same terms as the preferred stock purchased earlier
in 1995. On November 13, 1995, Guardian purchased an additional $6.25 million
of preferred stock. Management expects that this $12.5 million will be
sufficient for the Company's cash needs through at least the end of fiscal
1996.
The Company anticipates that it will need additional funding thereafter, and
that it will require additional equity in the third or fourth quarter of fiscal
1996 to meet the net worth covenant in its commercial credit facility. The
Company's Board of Directors authorized the issuance of an additional 25,000
shares of preferred stock at its annual meeting on November 9, 1995, bringing
the total number of authorized shares to 50,000, of which 25,000 have
been issued. At this time, Guardian has not indicated any intention to
discontinue funding the Company. If Guardian were to discontinue funding the
Company, or offer funding to the Company on terms that were not satisfactory to
the Company's disinterested directors, then the Company would have to seek
alternative sources of funding. There is no assurance that such alternative
sources of funding would be available. In such case, the Company would be
unable to meet its obligations and would be materially adversely affected. The
Company's Board of Directors authorized the issuance of additional preferred
stock (on the same terms as that previously issued) to facilitate additional
equity investments by Guardian.
-11-
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 9, 1995, at the Company's Annual Meeting of Stockholders,
the following matters were submitted to votes of the Company's stockholders:
The stockholders elected Ralph J. Gerson, Jeffrey A. Knight, C.K.
Prahalad, Rex Tapp, Robert M. Teeter, Charles C. Wilson, Mark S. Wrighton and
Peter Joel C. Young as directors.
The stockholders approved the appointment of Arthur Andersen LLP as
independent public accountants for the fiscal year ending June 30, 1996.
The number of votes cast for each of the above is summarized in the
table below:
<TABLE>
<CAPTION>
Broker
For Against Withheld Abstentions Non-votes Total
DIRECTORS:
<S> <C> <C> <C> <C> <C> <C>
Ralph J. Gerson 93,230,276 - - 123,857 28,300 93,382,433
Jeffrey A. Knight 93,231,326 - - 122,807 28,300 93,382,433
C.K. Prahalad 93,217,258 - - 136,875 28,300 93,382,433
Rex Tapp 93,221,551 - - 132,582 28,300 93,382,433
Robert M. Teeter 93,222,558 - - 131,575 28,300 93,382,433
Charles C. Wilson 93,225,526 - - 128,607 28,300 93,382,433
Mark S. Wrighton 93,228,458 - - 125,675 28,300 93,382,433
Peter Joel C. Young 93,218,126 - - 136,007 28,300 93,382,433
APPOINTMENT OF ARTHUR
ANDERSEN 93,203,018 64,200 - 112,455 2,760 93,382,433
</TABLE>
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit 27
B. REPORTS ON FORM 8-K
Report on Form 8-K dated September 20, 1995, reporting the purchase
of 6,250 shares of Series A Cumulative Preferred Stock by Guardian
Industries Corp. for an aggregate purchase price of $6,250,000.
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OIS Optical Imaging Systems, Inc.
(Registrant)
Date: November 14, 1995 By: /s/Rex Tapp
--------------------------------
Rex Tapp
President and Chief Executive
Officer
Date: November 14, 1995 By: /s/Charles C. Wilson
--------------------------------
Charles C. Wilson
Executive Vice President
(Principal Financial and
Accounting Officer)
-13-
<PAGE> 14
EXHIBIT INDEX
Exhibit
No. Description Page
- ------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS
</LEGEND>
<CIK> 0000753601
<NAME> OIS OPTICAL IMAGING
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 612,719
<SECURITIES> 0
<RECEIVABLES> 2,355,593
<ALLOWANCES> 60,000
<INVENTORY> 3,318,579
<CURRENT-ASSETS> 12,338,894
<PP&E> 54,822,052
<DEPRECIATION> 7,447,328
<TOTAL-ASSETS> 59,713,618
<CURRENT-LIABILITIES> 4,331,220
<BONDS> 0
<COMMON> 967,221
0
187
<OTHER-SE> 7,815,591
<TOTAL-LIABILITY-AND-EQUITY> 59,713,618
<SALES> 2,141,893
<TOTAL-REVENUES> 2,141,893
<CGS> 5,345,652
<TOTAL-COSTS> 7,014,453
<OTHER-EXPENSES> 235,035
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 288,532
<INCOME-PRETAX> (5,107,595)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,107,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,107,595)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
