<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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 UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _____________
Commission File Number 0-17478
WISMER*MARTIN, INC.
(Exact name of small business issuer as specified in its charter)
WASHINGTON 91-1196514
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
N. 12828 NEWPORT HIGHWAY
MEAD, WASHINGTON 99021-9988
(Address of principal executive offices)
(509) 466-0396
(Issuer's telephone number)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: AS OF NOVEMBER 1, 1995,
THERE WERE 16,325,461 SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK,
PAR VALUE $.001, WHICH IS THE ONLY CLASS OF COMMON OR VOTING STOCK OF THE
REGISTRANT.
Transitional Small Business disclosure Format (check one):
Yes ___; No _X_
<PAGE>
WISMER*MARTIN, INC.
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
-------------
I N D E X
Page
----
PART I - Financial Information
Item 1 - Consolidated Balance Sheets as of September 30, 1995
and June 30, 1995............................................ 1
- Consolidated Statements of Operations for the Three Months
Ended September 30, 1995 and 1994............................ 2
- Consolidated Statements of Cash Flows for the Three Months
Ended September 30, 1995 and 1994............................ 3
- Notes to Consolidated Financial Statements.................... 4-5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 6-9
PART II - Other Information............................................. 10
<PAGE>
WISMER*MARTIN, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1995 AND JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION> September 30, June 30,
1995 1995
------------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 135,776 $ 91,225
Trade receivables, net of allowance for doubtful
accounts of $73,971 and $255,647 924,189 854,474
Unbilled costs and expenses 11,300 37,800
Inventories 175,801 184,803
Prepaids and other assets 264,978 148,066
----------- -----------
Total current assets 1,512,044 1,316,368
Property, plant and equipment, net 1,537,024 1,802,139
Software development costs, net of accumulated
amortization of $1,757,130 and $1,491,918 3,053,397 2,879,421
Other assets, net of accumulated amortization
of $241,055 and $206,637 115,015 249,235
----------- -----------
Total assets $ 6,217,480 $ 6,247,163
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Notes payable to bank $ 385,300 $ 583,964
Accounts payable 716,429 863,110
Accrued wages and related taxes 301,941 351,562
Other accrued liabilities 167,550 184,516
Deferred revenue 1,856,827 1,922,539
Long-term debt, due within one year 34,937 70,335
Obligations under capital leases, due within
one year 26,071 30,500
----------- -----------
Total current liabilities 3,489,055 4,006,526
Other liabilities 78,408 86,984
Long-term debt, due after one year 765,446 879,662
Convertible subordinated debentures -- 3,000,000
Obligations under capital leases, due after
one year 41,064 67,615
----------- -----------
Total liabilities 4,373,973 8,040,787
----------- -----------
Commitments
Stockholders' Equity (Deficit):
Common stock, $.001 par value 20,000,000 shares
authorized:
16,325,461 and 9,847,625 shares issued
and outstanding 16,325 9,848
Additional paid-in capital 4,947,357 1,203,809
Excess purchase price of acquired subsidiary (2,533,308) (2,533,308)
Retained earnings (deficit) (586,867) (473,973)
----------- -----------
Stockholders' equity (deficit) 1,843,507 (1,793,624)
----------- -----------
Total liabilities and stockholders' equity
(deficit) $ 6,217,480 $ 6,247,163
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
WISMER*MARTIN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
Net Sales
Software license fees $ 259,855 $1,121,434
Equipment, software and supplies sales 299,184 649,105
Software and hardware maintenance contracts 1,034,147 945,901
Service revenue 475,263 867,830
Discounts (130,934) (260,998)
------------ ----------
Net Sales 1,937,515 3,323,272
------------ ----------
Operating Expenses:
Cost of software license fees 114,037 148,130
Cost of equipment, software and supplies sold 200,992 483,884
Cost of support and operations 524,049 743,348
Selling and marketing 265,830 581,948
General and administrative 659,294 958,783
Product research, development and
enhancements 522,434 631,604
Capitalized software development costs (264,415) (360,471)
------------ ----------
Total operating expenses 2,022,221 3,187,226
------------ ----------
Operating Income (loss) (84,706) 136,046
------------ ----------
Other Income (Expense):
Interest income 3,182 5,496
Interest expense (89,570) (82,601)
------------ ----------
Total Other Income (Expense) (86,388) (77,105)
------------ ----------
Income (Loss) Before Income Taxes (171,094) 58,941
Income Tax Expense (Benefit) (58,200) 18,272
------------ ----------
Net income (loss) $ (112,894) $ 40,669
------------ ----------
Net Income (Loss) Per Share $ (0.01) $ Nil
------------ ----------
Weighted average common shares outstanding 13,086,543 9,726,365
------------ ----------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
WISMER*MARTIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (112,894) $ 40,669
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 439,980 319,333
Provision for bad debts -- 18,767
Loss on property, plant and equipment disposal (11,672) --
Change in operating assets and liabilities:
Trade receivables (69,715) (107,685)
Unbilled costs and expenses 26,500 19,550
Inventories 9,002 213,572
Prepaids and other assets (116,912) 31,948
Accounts payable (146,681) (629,040)
Accrued wages and related taxes (49,621) (142,244)
Other accrued liabilities (16,966) (159,020)
Income taxes payable -- 19,289
Deferred revenue (65,712) (65,509
Other liabilities (8,577) (22,661)
------------ ---------
Net cash used by operating activities (123,267) (463,032)
------------ ---------
Cash flows from investing activities
Proceeds from disposition of property,
plant and equipment 155,286 --
Purchase of property, plant and equipment (28,948) (157,450)
Additions to software development costs (429,088) (382,971)
------------ ---------
Net cash used in investing activities (302,750) (566,372)
------------ ---------
Cash flows from financing activities
Payment of long-term debt (149,614) (18,841)
Proceeds from issuance of common stock 849,826 120,000
Payments under capital lease obligations (30,980) (4,790)
Net proceeds (payments) on notes payable
to bank (198,664) 447,607
------------ ---------
Net cash provided by financing activities 470,568 543,976
------------ ---------
Net increase (decrease) in cash and cash
equivalents 44,551 (485,429)
Cash and cash equivalents at beginning of period 91,225 588,349
------------ ---------
Cash and cash equivalents at end of period $ 135,776 $ 102,920
------------ ---------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 171,788 $ 125,267
------------ ---------
Income taxes $ -- $ --
------------ ---------
Noncash financing activities:
Conversion of convertible subordinated
debentures to common stock $ 500,000 $ --
------------ ---------
Subordinated debentures accepted as
consideration for common stock $ 2,500,000 $ --
------------ ---------
------------ ---------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
1. COMPANY ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. These financial statements fhould be read in
conjunction with the financial statements and related notes included in
the Company's 1995 Form 10-KSB. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the three month period ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the year ending June
30, 1996.
2. CONVERTIBLE SUBORDINATED DEBENTURES:
On August 26, 1993, the Company issued convertible subordinated
debentures with a face value of $500,000 in exchange for cash. The
debentures are due August 31, 1998. Interest accrues on the outstanding
principal of the debenture at the rate of 7% per annum and is payable
semi-annually on February 28 and August 31 during the term of the
debenture. The debenture allows the holder to convert in whole or part
the outstanding balance into shares of the Company's common stock at any
time during the term of the debenture at a fixed conversion price of
$.60 per common share. The Company may, at its option, call the
outstanding principal amount of the debentures for redemption at any
time after December 31, 1993. As of November 1, 1995, all of the holders
of these convertible subordinated debentures have converted their
debentures into common stock, utilizing the conversion feature of
their debentures.
On February 10, 1994, the Company issued convertible subordinated
debentures with a face value of $2,500,000 in exchange for all the
outstanding stock of Integrated Health Systems, Inc. ("IHS"). The
debentures are due January 31, 1999. Interest accrues on the outstanding
principal of the debenture at the rate of 7% per annum and is payable
semi-annually on January 31 and July 31 during the term of the
debenture. The debenture allows the holder to convert in whole or part
the outstanding balance into shares of the Company's common stock at any
time during the term of the debenture at a fixed conversion price of
$3.23 per common share.
The above conversion rates are subject to adjustment if (a) the Company
pays a dividend or makes a distribution of common shares (b) the Company
consolidates or merges into another corporation or (c) sells any
common shares (excluding existing stock bonus and option plans) for
less than the conversion price if the cumulative value of these
transactions exceeds $100,000. On August 15, 1995 the company's Form
SB-2 Registration of approximately 6 million shares of common stock for
sale to the public became effective with the Securities and Exchange
Commission. The Board of Directors of the Company set the price to the
public at $0.60 per share. As of September 26, 1995, the holders of all
of these convertible subordinated debentures have canceled their
debentures in exchange for common stock being offered through the public
offering, at $0.60 per share.
4
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
3. STOCK OFFERING:
On August 15, 1995, the Company's Form SB-2 Registration of 6,066,667
shares of common stock for the sale to the public became effective
with the Securities and Exchange Commission. The Board of Directors
set the offering price at $0.60 per share on August 21, 1995.
4. RECLASSIFICATIONS:
Certain financial statement amounts have been reclassified to conform to
the current period's presentation. These reclassifications have no effect
on the net loss or retained earnings opreviously reported.
5. NET INCOME (LOSS) PER SHARE:
The computation of net income (loss) per share in each period is based
on the weighted average number of common shares outstanding. When
dilutive stock options, debentures and warrants are included as share
equivalents using the treasury stock method, fully diluted net income
(loss) per common share is not materially different from primary net
income (loss) per common share.
5
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
-----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1995 COMPARED TO THE QUARTER ENDED
SEPTEMBER 30, 1994
The Company's fiscal year ends on June 30. In the following discussion,
the quarters ended September 30, 1995 and 1994 are the first quarters of the
Company's fiscal years ending June 30, 1996 and 1995. These are referred to as
1Q 96 and 1Q 95, respectively.
RESULTS OF OPERATIONS
SALES
Net sales for 1Q 96 were $1,937,515, representing a decrease of $1,385,757
or 41.7% from 1Q 95. This decrease is due primarily to reduced large
network/system sales of $772,000. There were no corresponding network sales in
1Q 96. These sales are high-dollar transactions which do not occur ratably from
quarter to quarter. Since there is no incremental "cost" to these sales, the
periods in which these sales are reported tend to distort the relationship
between cost of systems sold and sales.
OPERATING EXPENSES
The cost of software license fees was $114,037 for 1Q 96 which represents a
decrease of $34,000 or 23% from 1Q 95. Enhancements have been made to the SM*RT
Practice product, which have increased the marketability and extended the life
of this product. Thus, the unamortized costs associated with the previous
version of this product have been added to the costs of enhancement and
amortized over the estimated economic life of the new version (five years),
consistent with the Company's policy for software development costs.
The cost of equipment, software and supplies sold was $200,992 which is a
decrease of $283,000 or 59% from 1Q 95. Approximately $224,000 (46%) of this
reduction represents a decrease in sales volume, while the balance of $59,000
(13%) is the result from increased margins on sales made.
6
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
-----------
Cost of support and operations was $524,049 for 1Q 96, which represents a
decrease of $219,299 or 30% from 1Q 95. This is the result of a decrease of
approximately 20 employees in this area. Of the 20 employees, approximately 5
were transferred to "Product research, development and enhancements." The rest
of the reductions came through attrition, and were not replaced. Many of the
employees that left were technical personnel who are no longer needed due to:
(1) a reduction in new sales of software license contracts (and thus a reduction
in the number of personnel required for installation), and (2) product
improvements which have reduced the need for technical personnel to assist with
software support.
Selling and marketing expenses were $265,830 for 1Q 96, which represents an
decrease of $316,118 or 54% from 1Q 95. This decrease results form a reduction
in the number of sales and marketing personnel assigned to a major customer
contract contract in 1Q 96 when compared to 1Q 95. A substantial portion of the
additional expense in 1Q 95 was funded through the customer contract, which
corresponds to the $392,567 (45%) decrease in service revenues from 1Q 95 to
1Q 96.
Product research, development and enhancement costs decreased $109,170 or
17% for 1Q 96 as compared to 1Q 95. This decrease is the result of a reduction
in the number of personnel devoted to enhancing the Company's existing
products and developing new products.
The amount of expenses capitalized as software development costs for 1Q
96 were $264,415 as compared to $360,471 for 1Q 95. This decrease of $96,056
or 27% is due to the reduced staffing level in product research, development
and enhancements. Although there has been a decrease in the personnel
assigned to product enhancements, the percentage of enhancement costs
capitalized has remained fairly consistent: 51% for 1Q 96 and 57% for 1Q 95.
General and administrative expenses were $659,294 for 1Q 96 which
represents a decrease of $299,489 (31%) from the $958,783 incurred for 1Q 95.
This reduction reflects the success of the Company's efforts to control overhead
expenses such as executive salaries and rent expense. This reduction program is
discussed more fully in the "Financial Condition and Liquidity" section of the
Company's Form SB-2 filed August 15, 1995 and Form 10-KSB for the fiscal year
ended June 30, 1995.
Interest expense has increased $6,855 or 8% from 1Q 95 to 1Q 96. This
increase results from: 1) an increase in the interest rate on the Company's line
of credit of 1% per year (see "Line of Credit" included in the Company's Form
10-KSB for the fiscal year ended June 30, 1995), and 2) an increase in the
average outstanding balance of the line of credit ($223,500 for 1Q 95 as
compared to $484,600 in 1Q 96). Based on the elimination of $3 million of
convertible subordinated debentures as of September 30, 1995, the Company
expects interest expense for the fiscal year ending June 30, 1996 to be
approximately $150,000 less than was recorded for the fiscal year ended
June 30, 1995.
During 1Q 96, the Company reported an income tax benefit of $58,200 as
compared to an income tax provision of $18,272 in 1Q 95. The 1Q 96 benefit is
due to the creation of net operating loss carryforwards resulting from the 1Q 96
net operating loss which the Company believes will be available to offset the
future reversal of temporary differences created by software development costs
and other items which give rise to deferred tax liabilities. The remaining net
deferred tax asset is offset 100% by a valuation allowance as management could
not determine that it was more likely than not that this asset would be
realized.
The various factors discussed above resulted in a net loss of $112,894
($0.01 per share) for 1Q 96, as compared to a net income of $40,669 (less than
$0.01 per share) for the 1Q 94.
7
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
-----------
FINANCIAL CONDITION AND LIQUIDITY
During the quarter ended September 30, 1995, cash and cash equivalents
increased approximately $45,000. The largest source of cash to the Company
during the 1Q 96 was the public stock offering ($850,000). The proceeds of
the offering were primarily used to: 1) fund the additions to software
development costs of $429,000; 2) reduce the outstanding balance on the note
payable to bank by $199,000; 3) fund operations and purchase property, plant
and equipment by $123,000 and $29,000, respectively; with the balance
generating a $45,000 increase in cash at the end of the period. The overall
increase in the Company's cash position was the result of cash used by
operating activities of $123,000; cash used in investing activities of
$303,000 and cash provided by financing activities of $471,000. The
significant components of cash used by operating activities include a profit
for the quarter (after adjusting the net loss for noncash items including
depreciation and amortization of $440,000, provision for bad debts of
$118,000 and the gain on the disposal of property, plant and equipment of
$12,000) of $433,000, an increase in trade receivables of $187,000, an
increase in prepaids and other assets of $117,000, and a decrease in accounts
payable of $147,000. Significant components of cash used in investing
activities include investment in software development costs of $429,000,
reduced by the proceeds from the disposition of property, plant and equipment
of $155,000. Cash provided by financing activities consists of $3,350,000
received through the public stock offering, offset by the reduction of
$2,500,000 of convertible subordinated debentures, repayment of a loan
secured by the property, plant and equipment disposed of in the current
quarter in the amount of $150,000, and a reduction in the amount owed to the
bank under the Company's revolving line of credit by $199,000.
During the quarter ended September 30, 1994, cash and cash equivalents
decreased approximately $485,000. The largest source of cash to the Company
during the first quarter of last fiscal year was the Company's revolving line
of credit, which provided $448,000, while the greatest single use of cash was
the investment in software development costs of $383,000. The overall
decrease in the Company's cash position was the result of cash used by
operating activities of $463,000; cash used in investing activities of
$566,000 and cash provided by financing activities of $544,000. The
significant components of cash used by operating activities include a profit
for the quarter of $379,000 (after adjustment for noncash items
including depreciation and amortization of $319,000 and provision for bad
debts of $19,000), an increase in trade receivables of $108,000, a decrease
in inventories of $214,000, and decreases in accounts payable, accrued wages
and other accrued expenses totaling $930,000. Significant components of cash
used in investing activities include investment in software development costs
of $383,000and purchase of property, plant and equipment of $157,000. Cash
provided by financing activities consists primairly of borrowings on the
Company's revolving line of credit of $448,000 and proceeds from the issuance
of common stock totaling $120,000.
To date, the Company's primary sources of liquidity have been internally
generated funds, the sale of the subordinated convertible debentures and its
operating line of credit, of which $370,000 was outstanding at September 30,
1995. On a short-term basis, the Company's liquidity has been aided by its
recent stock offering, but is dependent on the continued availability of the
line of credit with the bank, software and hardware maintenance contracts
which provide over $300,000 in monthly revenues, and continued sales to new
customers as well as upgrade sales to existing customers. See the
discussion of the Company's contingency plans below. On a long-term basis,
liquidity has also been enhanced by the successful completion of the offering
(the Company will no longer be required to make interest payments on the
debentures and will not have to use its cash to pay off these notes in the
next four years). Other long-term measures being considered to further
develop liquidity are: the sale or refinancing of the Company's office
building in Spokane, Washington (having equity of approximately $800,000)
and discussions with GTE indicate a possible alliance between the two firms
which would provide increased opportunities for future
8
<PAGE>
WISMER*MARTIN, INC.
PART I - FINANCIAL INFORMATION, Continued
-----------
sales, the development of strategic alliances and joint venture partners, and
potential funding of future software development efforts.
Although the Company believes that its operating plan and efforts to obtain
other financing sources will be adequate to meet its fiscal 1996 working
capital needs, there can be no assurance that the Company may not experience
liquidity problems because of adverse market conditions or other unfavorable
events. The measures noted above, if successful as a whole, should be
adequate for the Company's short-term and long-term liquidity needs.
If, however, the Company's short-term liquidity needs are not met through the
stock offering and the reduction of debt, alternative measures will have to
be taken by the Company in order to ensure that the remaining sources of
liquidity are not exceeded by cash requirements. Alternative measures that
would be considered would rely heavily on further expense reductions,
principally in the form of salaries and benefits, in the areas of product
development and enhancements, and network (PHN) sales staff. While
expenditures in these areas enhance the Company's long-term growth potential,
they do not provide short-term liquidity. The Company would also look to
reduce overhead expenses while seeking to preserve the customer base which
provides software and hardware maintenance contracts (a source of
high-margin revenues). Management believes that, should they become
necessary, these cost-reduction efforts will be successful in reducing
expenditures to match the Company's reduced availability of liquidity until
the Company has the opportunity to take advantage of its long-term liquidity
opportunities.
9
<PAGE>
WISMER*MARTIN, INC.
PART II - OTHER INFORMATION
-----------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
A report on Form 8-K was filed on September 7, 1995 disclosing the
Company's achievement of debt and equity requirments by its bank under
the terms of the revolving line of credit between the Company and its
lender.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WISMER-MARTIN, INC.
------------------------
(Registrant)
Date: 11/17/95 /s/ Douglas A. Willford
----------------------------
Douglas A. Willford
Executive Vice President and Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND THE CONSOLIDATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE NONTHS ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 135,776
<SECURITIES> 0
<RECEIVABLES> 998,140
<ALLOWANCES> 73,971
<INVENTORY> 175,801
<CURRENT-ASSETS> 1,512,044
<PP&E> 1,537,024
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,217,480
<CURRENT-LIABILITIES> 3,489,055
<BONDS> 806,510
<COMMON> 16,325
0
0
<OTHER-SE> 1,827,182
<TOTAL-LIABILITY-AND-EQUITY> 6,217,480
<SALES> 299,184
<TOTAL-REVENUES> 1,937,515
<CGS> 200,992
<TOTAL-COSTS> 1,097,097<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89,570
<INCOME-PRETAX> (171,094)
<INCOME-TAX> (58,200)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (112,894)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<FN>
<F1> Total operating expenses, less "Selling and marketing" and
"General and administrative" expenses.
</TABLE>
