<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 December 31, 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 February 8, 1996:
Common Stock, $0.01 par value 96,770,172
- ----------------------------- ---------------------
Class Number of shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
Financial Statements
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31 Ended December 31,
----------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C>
Display revenue $1,164,394 $ 157,698 $ 2,235,519 $ 401,131
Engineering revenue 891,120 1,348,205 1,923,388 3,394,716
Sensor revenue 10,317 66,682 48,818 135,534
---------- ---------- ---------- ----------
TOTAL REVENUES 2,065,831 1,572,585 4,207,725 3,931,381
Cost of sales 6,226,015 4,094,064 11,571,668 7,524,630
---------- ---------- ---------- ----------
GROSS MARGIN (4,160,184) (2,521,479) (7,363,943) (3,593,249)
OPERATING EXPENSES
Internal research and development 386,870 334,912 916,240 657,122
Selling, general and administrative 1,382,545 1,014,775 2,521,976 1,854,610
---------- ---------- ---------- ----------
OPERATING LOSS (5,929,599) (3,871,166) (10,802,159) (6,104,981)
OTHER (INCOME) AND EXPENSE
Licensing and royalties (100,000) (41,696) (100,000)
Other (substantially all interest) 424,089 (48,651) 700,820 (70,831)
---------- ---------- ---------- ----------
NET LOSS $(6,353,688) $(3,722,515) $(11,461,283) $(5,934,150)
=========== ========== ============ ===========
Preferred stock dividends 435,616 -- 702,739 --
----------- ---------- ------------ -----------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $(6,789,304) $(3,722,515) $(12,164,022) $(5,934,150)
=========== ========== ============ ===========
NET LOSS PER COMMON
SHARE (Note B) $(.07) $(.07) $(.13) $(.14)
===== ===== ===== =====
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ ----------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ -- $ 495,854
Cash-restricted 311,834 334,227
Accounts receivable 2,173,127 2,097,024
(Net reserve for doubtful accounts of $60,000
at December 31, 1995 and June 30, 1995)
Receivable from U.S. Government 312,758 2,584,117
Inventory 3,982,417 3,360,062
Prepaid expenses 457,747 299,605
Insurance receivable 6,174,546 2,277,385
Other current assets 75,541 80,560
---------- ----------
TOTAL CURRENT ASSETS 13,487,970 11,528,834
PROPERTY AND EQUIPMENT
Land 3,000,000 3,000,000
Building 10,000,000 --
Leasehold improvements -- 1,037,010
Machinery and other equipment 9,662,101 9,105,373
Capitalized leases - equipment 365,000 365,000
Construction in process 32,959,188 39,339,490
---------- -----------
55,986,289 52,846,873
Less accumulated depreciation and
amortization (7,494,218) (7,111,928)
------------ ----------
NET TOTAL PROPERTY AND EQUIPMENT 48,492,071 45,734,945
TOTAL ASSETS $61,980,041 $57,263,779
=========== ===========
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
---------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Current installments on capital lease obligation $ 113,095 $ 121,633
Current installment on long-term debt 1,500,000
Accounts payable 2,458,041 4,178,305
Accrued liabilities 2,453,581 1,690,709
Deferred revenue 537,030 326,954
----------- -----------
TOTAL CURRENT LIABILITIES 7,061,747 6,317,601
LONG-TERM DEBT 43,500,000 40,000,000
LOCAL GOVERNMENT SUBSIDY 3,000,000 3,000,000
CAPITAL LEASE OBLIGATION 73,648 125,454
----------- -----------
TOTAL LIABILITIES 53,635,395 49,443,055
STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.01 per share:
Series A, 8% cumulative, non-convertible
and non-voting
Authorized - 50,000 shares
Issued and outstanding - 25,000 shares
at December 31, 1995 and 12,500 shares at June 30, 1995 250 125
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 96,725,987 shares
at December 31, 1995 and 96,712,931 at June 30, 1995 967,260 967,129
Additional paid-in capital 93,923,278 81,325,112
Accumulated deficit (86,302,412) (74,138,390)
Deferred compensation (243,730) (333,252)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 8,344,646 7,820,724
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $61,980,041 $57,263,779
=========== ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 5
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(11,461,283) $ (5,934,150)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,419,300 552,069
Deferred compensation expense 89,522 113,557
Impact on cash flows from changes in
assets and liabilities:
Accounts receivable (1,701,905) (1,167,120)
Prepaid expenses and other (153,123) (28,124)
Inventory (622,355) (461,094)
Accounts payable and accrued expenses (1,660,131) (8,261,632)
Deferred revenue 210,076 (40,795)
------------ ------------
NET CASH (USED IN)
OPERATING ACTIVITIES (13,879,899) (15,227,289)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,176,426) (13,605,123)
------------ ------------
NET CASH (USED IN) INVESTING
ACTIVITIES (4,176,426) (13,605,123)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (60,344) (99,082)
Net proceeds from line of credit 5,000,000 24,500,000
Net proceeds from issuance of common stock 98,422 117,818
Net proceeds from issuance of preferred stock 12,500,000 --
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 17,538,078 24,518,736
------------ ------------
(DECREASE) IN CASH AND CASH
EQUIVALENTS (518,247) (4,313,676)
NET CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 830,081 4,447,069
------------ ------------
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 311,834 $ 133,393
============ ============
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
DECEMBER 31,
1995 1994
-------- ------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for interest $737,857 $6,037
Cash equivalents:
</TABLE>
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.
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTIONS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
DECEMBER 31,
1995 1994
-------- ----------
<S> <C> <C>
Accrual of preferred dividends $702,739
Capitalization of equipment pursuant 365,000
to capital lease obligation
Conversion of Guardian Equity to 10,500,000
common stock
</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
statements 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 December 31, 1995 and
June 30, 1995, the results of operations for the three and six months ended
December 31, 1995 and 1994 and cash flows for the six months ended December 31,
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 December 31, 1995 and 1994
was 96,724,556 and 55,704,048, respectively. The weighted average number of
shares used in the computation for the six months ended December 31, 1995 and
1994 were 96,721,392 and 43,265,306, 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 issued 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 would have been $.06 and $.04 per share based on a
weighted average number of approximately 96,600,000 shares for the six months
and three months ending December 31, 1994, respectively.
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 OPERATIONS
Summary
The operating results for the first six months of fiscal 1996 continue to
reflect a significant increase in losses resulting from higher costs of sales
and operating costs. Although revenue from the sale of displays has increased,
the Company's ability to generate additional sales of displays continues to be
constrained because the Company's new Northville facility has not yet
completed start-up. The Company continues to focus on the sale of standard
displays and to limit customer-funded engineering activity. The Company has
made progress in addressing the manufacturing problems at its Troy facility,
which are discussed below under Cost of Sales. These manufacturing problems
together with the concurrent costs of maintaining and operating the Troy
facility and starting up the Northville facility resulted in significantly
higher costs and losses in the first half of fiscal 1996.
Management does not expect fiscal 1996 revenue to increase significantly over
fiscal 1995 and the trend of increased costs and increased operating losses is
expected to continue at least through the end of the current fiscal year. The
degree of success of the Company's efforts during fiscal 1996 will determine
whether the Company's costs of sales and overall operating results can improve
in the following fiscal years.
The start-up of the Northville facility is progressing. The first
pre-production glass cells were completed during the first quarter of fiscal
1996 and the second set of pre-production glass cells were completed during the
second quarter of fiscal 1996. On the basis of pre-production runs, additional
progress must be made in certain critical areas of the manufacturing process at
the Northville facility, including demonstration of consistency in process
control, before the Northville facility will be ready for the full transfer of
production from the Troy facility. Management now expects the start-up phase
to be ongoing through the end of fiscal 1996. However, the start-up of a
facility as unique and complex as the Northville facility is an inherently
uncertain undertaking.
-8-
<PAGE> 9
Three months and six months ended December 31, 1995 and 1994.
REVENUES
Total revenue for the first six months of fiscal 1996 of $4,207,725 was 7%
higher than total revenue of $3,931,381 for the same period in the preceding
fiscal year. Total revenue for the second quarter of fiscal 1996 of $2,065,831
was 31% higher than total revenue of $1,572,585 for the second quarter in the
preceding fiscal year. Although total revenue for the first six months of
fiscal 1996 was not significantly different when compared to the same period in
the preceding fiscal year, as expected revenue from customer-funded engineering
activity decreased while revenue from the sale of displays increased.
Revenue from the sale of displays for the first six months of fiscal 1996 and
the second quarter of fiscal 1996 of $2,235,519 and $1,164,394 was 457% and
638% higher, respectively, when compared to $401,131 and $157,698 for the same
periods in the preceding fiscal year. Revenue from customer-funded engineering
and development activities for the first six months of fiscal 1996 and the
second quarter of fiscal 1996 of $1,923,388 and $891,120 was 43% and 34% lower,
respectively, when compared to $3,394,716 and $1,348,205 for the same periods
in the preceding fiscal year. Management expects this trend to continue
throughout fiscal 1996 as the Company completes its transition to full scale
manufacturing.
Significant additional display revenue will be necessary if the Company is to
improve operating results. Until Management is better able to evaluate the
time needed to complete the start-up of the Northville facility, the Company
continues to restrict additional orders for displays for delivery in fiscal
1996 since the capacity of the Troy facility is limited. While Management
expects the level of 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 currently attempting to increase
its sales of displays in the military and avionics market segments and is
working with potential customers on other applications for the Company's
products. If these efforts, along with the start-up of the Northville
facility, are successful, the Company's revenue could increase significantly in
fiscal 1997 and thereafter.
The Company is continuing to deliver displays to customers, and customers
continue to report that they are pleased with the quality and performance of
the Company's products.
COST OF SALES
Cost of sales for the first six months and second quarter of fiscal 1996 of
$11,571,668 and $6,226,015 was 54% and 52% higher, respectively, when compared
to $7,524,630 and $4,094,064 for the same periods in the preceding fiscal year.
Furthermore, the cost of sales as a percentage of revenue increased, for the
first six months and second quarter of fiscal 1996, to 275% and 301%,
respectively, from 191% and 260% when compared to the same period in the
preceding fiscal year.
-9-
<PAGE> 10
Continuing manufacturing difficulties at the Troy facility have resulted in low
yields, equipment downtime and significant repair costs necessary to keep the
Troy facility operating. These factors have significantly increased the
Company's cost of sales. While many of these problems have been addressed, some
problems are inherent in the Troy facility which was designed for research and
development rather than volume manufacturing. The increase in cost of sales is
further magnified when compared to fiscal 1995 because of the additional costs
incurred to maintain and staff both the Troy and Northville facilities during
fiscal 1996. Depreciation expense, a component of cost of sales, increased
approximately $750,000 during the first six months and first quarter of fiscal
1996 when compared to the same periods in the preceding fiscal year due to
portions of the Northville facility and process equipment being placed into
service during the current fiscal year.
Management also continues to address certain manufacturing process problems in
connection with the start-up of the Northville facility. Management expects
that these manufacturing process problems will be resolved by the time all
manufacturing is transferred from the Troy facility to the Northville facility.
However, it will not be possible to know the results of the Company's efforts
until the start-up process at the Northville facility is complete.
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. Due to the increased time anticipated to complete the start-up,
Management does not expect the transfer of production to begin until the first
quarter of fiscal 1997.
Other Costs
The Company's internal research and development costs for the first six months
and second quarter of fiscal 1996 of $916,240 and $386,870 were 40% and 16%
higher, respectively, than $657,122 and $334,912 which was incurred in the same
periods in fiscal 1995. The Company continues to commit additional resources
to expanding its standard product line, improving current products, improving
the Company's technical position and protecting the Company's intellectual
property rights. Management expects that internal research and development
costs in fiscal 1996 and thereafter will be higher than fiscal 1995 levels.
The Company's Selling, General and Administrative costs for the first six
months and second quarter of fiscal 1996 of $2,521,976 and $1,382,545 were 36%
higher when compared to $1,854,610 and $1,014,775 for the same periods in
fiscal 1995. The increase is attributable to the Company expanding its
marketing and administrative organization to manage the current and anticipated
increases in marketing and general business activity. Furthermore, legal and
consulting fees relating to the administration and performance of government
contracts increased.
-10-
<PAGE> 11
Interest expense for the first six months and second quarter of fiscal 1996
increased approximately $770,000 and $470,000 when compared to the same periods
during fiscal 1995. This was due to portions of the Northville facility being
placed in service, with the consequence that a proportionate amount of the
interest incurred on the debt to finance the construction of the Northville
facility is no longer being capitalized as part of the cost of the facility.
The Company also continued to incur additional interest on higher debt levels
to finance ongoing operations when compared to fiscal 1995. Interest expense
will continue to increase at an accelerated rate throughout the remainder of
fiscal 1996 and thereafter as the start-up of the Northville facility is
completed and it begins operation. The capitalization of interest is expected
to be completed by the end of fiscal 1996 and thereafter all of the Company's
interest expense will be treated as a period cost.
Other differences between the first six months and second quarter of fiscal
year 1996 and 1995 are not discussed because Management believes they result
principally from differences in timing of revenue and expenses, and not from
any known trends.
Liquidity and Capital Resources.
1. Liquidity
The Company's cash and cash equivalents at December 31, 1995 was $311,834 all
of which 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 Northville facility and not for continuing operations. The
Company is attempting to manage its cash requirements to minimize borrowings
under its $52.5 million commercial credit facility. See Financing Activities.
OPERATING ACTIVITIES
During the first six months of fiscal 1996 the Company incurred a net loss of
$11,461,283. Accounts Receivable increased by a net amount of $1.7 million due
to the Company's incurring approximately $3.9 million of expenses in connection
with the March 1995 fire, which expenses are expected to be reimbursed by
insurance later in fiscal 1996, and the receipt of approximately $2.2 million
from ARPA in connection with equipment procured under the ARPA agreement.
Accounts payable and accrued expenses decreased approximately $1.8 million due
to the timing of payment of invoices relating to construction of the Northville
facility. Depreciation expense increased approximately $1.4 million due to
portions of the Northville facility being placed in service.
INVESTING ACTIVITIES
During the first six months of fiscal 1996, the Company spent approximately
$4.2 million for production equipment and start-up costs relating to the
Northville facility.
-11-
<PAGE> 12
FINANCING ACTIVITIES
During the first six months of fiscal 1996, the Company received $12.5 million
from the sale of preferred stock to Guardian Industries Corp. and borrowed $5
million under its $52.5 million credit facility with NBD Bank N.A. and Bank of
America NT&SA. As of December 31, 1995, the Company's aggregate borrowings
under its commercial credit facility were $45 million. As of February 8, 1996,
the Company's aggregate borrowings under its commercial credit facility were
$49.5 million.
The Company's liquidity is decreasing and management anticipates a need for
additional cash to support the Company's operations during the fourth quarter
of fiscal 1996. However, the Company will require additional equity during the
third quarter of fiscal 1996 to meet a minimum equity covenant in its
commercial credit agreement, which requires the Company to maintain a net worth
of at least $5 million. See Capital Resources.
2. Capital Resources
The Company has financed the cost of the Northville facility and provided
working capital through the current period. The cost of the Northville
facility is currently anticipated to be $102.3 million, which is slightly over
the original estimate of $101.5 million. Over 90% of the costs have been
committed and the plant is scheduled for completion of start-up and beginning
of full transfer of production from Troy during the first quarter of fiscal
1997.
The Company is in the process of completing the acquisition from Wayne County
of an additional 80 acres of land adjacent to the Company's existing property
in Northville. The acquisition of this land will ensure that sufficient space
is available if the Company should need to expand. The agreement with Wayne
County provides a conditional purchase price of $800,000. The price is
conditioned upon the Company beginning construction of a large scale
manufacturing facility within five years and employing 500 employees at such
facility within eight years. If the Company does not meet these conditions, it
will have the option of either (i) paying approximately $3 million to the
county as additional consideration for the land or (ii) conveying the land back
to the county and receiving a refund of the original $800,000 purchase price
(without interest).
Due to the level of current and anticipated losses, Management expects
additional capital resources will be needed to meet the minimum equity
covenant in the Company's commercial credit agreement and to support the
Company's operations. During the first six months of fiscal 1996, Guardian
Industries Corp. ("Guardian") purchased $12.5 million in preferred stock on the
same terms as the preferred stock purchased by Guardian in fiscal 1995. The
Company and Guardian are in the process of discussing the terms of an agreement
which would make available up to $10 million in additional funding. Management
expects this amount would be sufficient to meet the Company's needs through the
end of fiscal 1996 and that an agreement with Guardian will be concluded by the
end of February 1996. At this time Guardian has indicated its intention to
continue 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.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. EXHIBITS
Exhibit 27. Financial Data Schedule (EDGAR version only).
B. REPORTS ON FORM 8-K
None.
-13-
<PAGE> 14
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: February 13, 1996 By: /s/ Rex Tapp
-----------------------------
President and Chief Executive
Officer
Date: February 13, 1996 By: /s/ Charles C. Wilson
-----------------------------
Charles C. Wilson
Executive Vice President
(Principal Financial and
Accounting Officer)
-14-
<PAGE> 15
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)
<TABLE>
<S> <C> <C>
Date: February __, 1996 By:
-----------------------------
Rex Tapp
President and Chief Executive
Officer
Date: February __, 1996 By:
-----------------------------
Charles C. Wilson
Executive Vice President
(Principal Financial and
Accounting Officer)
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER
31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 311,834
<SECURITIES> 0
<RECEIVABLES> 2,233,127
<ALLOWANCES> 60,000
<INVENTORY> 3,982,417
<CURRENT-ASSETS> 13,487,970
<PP&E> 55,986,289
<DEPRECIATION> 7,494,218
<TOTAL-ASSETS> 61,980,041
<CURRENT-LIABILITIES> 7,061,747
<BONDS> 0
0
250
<COMMON> 967,260
<OTHER-SE> 7,377,136
<TOTAL-LIABILITY-AND-EQUITY> 61,980,041
<SALES> 2,065,831
<TOTAL-REVENUES> 2,065,831
<CGS> 6,226,015
<TOTAL-COSTS> 7,995,430
<OTHER-EXPENSES> 424,089
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 661,033
<INCOME-PRETAX> (6,353,688)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,353,688)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,353,688)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
