UNITED STATES 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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from: Not applicable
Commission File No. 0-17927
JANEX INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
COLORADO 84-1034251
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 N. 44TH STREET, SUITE 225
PHOENIX, ARIZONA 85018-7247
(Address of Principal Executive Offices)
(602) 808-8765
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]
As of November 1, 1999, the issuer had 18,098,750 shares of its common stock, no
par value, issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
JANEX INTERNATIONAL, INC.
TABLE OF CONTENTS
PAGE
NUMBER
------
PART I
ITEM 1 CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheets as of September 30, 1999 (unaudited)
and December 31, 1998 3
Statements of Operations (unaudited) for the three
months and nine months ended September 30,
1999 and 1998 4
Statements of Cash Flows (unaudited) for the nine months
ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements (unaudited) 6-9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10-13
PART II OTHER INFORMATION
ITEM 5 OTHER INFORMATION 14
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURE 15
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<PAGE>
JANEX INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, September 30,
1998 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 62,412 $ 17,764
Accounts receivable, net of allowance of
$26,000 and $25,955 at December 31, 1998
and September 30, 1999, respectively 162,710 200,234
Inventories 131,098 19,152
Prepaid royalties 59,934 80,576
Other current assets 25,257 8,401
------------ ------------
Total current assets 441,411 326,127
Property and equipment, net 258,103 138,289
Intangible assets, net 405,625 327,064
Other assets -- 15,455
------------ ------------
Total assets $ 1,105,139 $ 806,935
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Advance from parent $ 621,080 $ 1,697,964
Accounts payable 602,715 358,051
Accrued expenses 1,203,277 954,152
Note payable - other 257,000 256,943
------------ ------------
Total current liabilities 2,684,072 3,267,110
Shareholders' deficit:
Class A convertible preferred stock,
no par value:
Authorized shares - 5,000,000
Issued and outstanding shares - 5,000,000 at
December 31, 1998 and September 30, 1999,
respectively 569,022 569,022
Common stock, no par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 18,098,750 at
December 31, 1998 and September 30, 1999,
respectively 12,803,327 12,803,327
Additional paid-in capital 554,517 554,517
Accumulated deficit (15,505,799) (16,387,041)
------------ ------------
Total shareholders' deficit (1,578,933) (2,460,175)
------------ ------------
Total liabilities and shareholders' deficit $ 1,105,139 $ 806,935
============ ============
See accompanying notes.
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JANEX INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1998 1999
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net Sales $ 779,014 $ 47,442 $ 2,979,639 $ 292,377
Cost of Sales 495,182 36,973 1,619,705 238,882
Royalty Expense 122,425 76,112 344,350 173,503
------------ ------------ ------------ ------------
Gross margin 161,407 (65,643) 1,015,584 (120,008)
Operating Expenses:
Selling, general
and administrative 288,991 137,874 1,051,891 491,982
Depreciation and
amortization 94,246 95,617 256,509 244,574
------------ ------------ ------------ ------------
Loss from operations (221,830) (299,134) (292,816) (856,564)
------------ ------------ ------------ ------------
Other income (expense)
Interest income -- -- 4,160 --
Interest expense (56,542) (7,305) (170,313) (19,665)
Other income (expense) (1,840) 1,362 -- (288)
------------ ------------ ------------ ------------
Total other income (expense) (58,382) (5,943) (166,153) (19,953)
------------ ------------ ------------ ------------
Loss before income tax (280,212) (305,077) (458,969) (876,517)
Income tax provision -- -- (5,900) (4,725)
------------ ------------ ------------ ------------
Net Loss $ (280,212) $ (305,077) $ (464,869) $ (881,242)
============ ============ ============ ============
Loss per common share $ (0.03) $ (0.02) $ (0.05) $ (0.05)
Weighted average number of
shares outstanding 9,962,105 18,098,750 9,962,105 18,098,750
============ ============ ============ ============
</TABLE>
See accompanying notes.
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<PAGE>
JANEX INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
--------------------------
1998 1999
----------- -----------
OPERATING ACTIVITIES
Net loss $ (464,869) $ (881,242)
Adjustments to reconcile net income (loss) to net
cash Provided by (used in) operating activities:
Depreciation 144,477 139,538
Amortization 112,032 105,036
Inventory Write-offs -- 15,238
Imputed Interest 60,819 --
Provision (credit) for doubtful accounts (6,939) (18)
Changes in operating assets and liabilities:
Accounts receivable (179,011) (37,506)
Inventories (301,171) 96,708
Prepaid expenses and other (7,205) (19,240)
Accounts payable 365,990 (244,664)
Accrued expenses and other 188,924 (249,126)
----------- -----------
Net cash used in operating activities (86,953) (1,075,276)
INVESTING ACTIVITIES
Purchase of property and equipment (81,575) (19,723)
Product development costs (92,990) (26,476)
----------- -----------
Net cash used in investing activities (174,565) (46,199)
FINANCING ACTIVITIES
Advances from parent -- 1,076,884
Net payments on notes payable 27,811 (57)
Payments on loans payable - agent (74,939) --
Proceeds from issuance of common stock 250,000 --
----------- -----------
Net cash provided by financing activities 202,872 1,076,827
Net decrease in cash and cash equivalents (58,646) (44,648)
Cash and cash equivalents at beginning of period 164,672 62,412
----------- -----------
Cash and cash equivalents at end of period $ 106,026 $ 17,764
=========== ===========
See accompanying notes.
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<PAGE>
JANEX INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Janex International, Inc. and subsidiaries are in the business of developing,
marketing and selling toys and functional children's products which are
manufactured by subcontractors. Janex sells its products primarily to U.S.-based
retailers and their Hong Kong subsidiaries.
On December 11, 1998, approximately 79 percent of Janex's outstanding stock was
acquired by Futech Interactive Products, Inc. ("Futech"). Because the minority
interest exceeds 20 percent, Janex did not establish a new basis of accounting
upon the acquisition.
The accompanying consolidated financial statements are unaudited, but, in the
opinion of the management of Janex, contain all adjustments necessary to present
fairly the financial position at September 30, 1999, the results of operations
for the nine months ended September 30, 1999 and 1998, and the changes in cash
flows for the nine months ended September 30, 1999 and 1998. These adjustments
are of a normal recurring nature. The consolidated balance sheet as of December
31, 1998 is taken from Janex's audited financial statements.
Some of the information and footnote disclosures normally included in financial
statements that are prepared in accordance with generally accepted accounting
principles, have been condensed or omitted under the rules and regulations of
the Securities and Exchange Commission, however management of Janex believes
that the disclosures contained in the financial statements are adequate to make
the information presented not misleading. For further information, refer to the
consolidated financial statements and notes included in Janex's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1998, as filed with the
Securities and Exchange Commission.
The consolidated financial statements include the accounts of Janex and its
wholly owned subsidiaries. All intercompany accounts and transactions have been
eliminated in consolidation. All balance sheet accounts of Janex's foreign
subsidiaries are translated at the current exchange rate at the balance sheet
date, while income statement items are translated at the average currency
exchange rates for each period presented. The resulting translation adjustments,
if significant, are recorded as comprehensive income. At December 31, 1998 and
September 30, 1999, the adjustment was not significant.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
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<PAGE>
Certain reclassifications have been made to the 1998 consolidated financial
statements to conform to the 1999 presentation.
The financial statements have been prepared assuming Janex will continue as a
going concern. Janex has incurred significant operating losses in the past three
years and has negative net worth and negative working capital as of September
30, 1999. These factors raise significant doubt as to Janex's ability to
continue as a going concern.
Janex's ultimate ability to continue as a going concern depends on the market
acceptance of its products, and the achievement of operating profits and
positive cash flow. Janex will also require additional financial resources from
its parent or other sources to provide near term operating cash to enable Janex
to execute its plans to move toward profitability. Management believes that the
financial resources of its new parent company, in addition to sales to be
generated from new product lines that are being developed, will be sufficient to
allow Janex to continue in operation.
The results of operations for the nine months ended September 30, 1999, are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending December 31, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
Janex has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued Employees" (APB 25), and related Interpretations in
accounting for its employee stock options. Under APB 25, to the extent that the
exercise price of Janex's employee stock options equals management's estimate of
the fair market value of the underlying stock on the date of grant, no
compensation expense is recognized.
Loss per share is calculated in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128, "EARNINGS PER SHARE," (Statement 128).
Basic earnings per share is computed using the weighted average number of common
shares. Diluted earnings per share is computed using the weighted average number
of common share equivalents during the period. Common share equivalents include
employee stock options using the treasury method and dilutive convertible
securities using the if-converted methods. Common share equivalents have been
excluded for the calculation of loss per share for all periods presented, as
their effect is anti-dilutive.
As of January 1, 1998, Janex adopted SFAS No. 130, REPORTING COMPREHENSIVE
INCOME (Statement 130). Statement 130 establishes new rules for the reporting
and display of comprehensive loss and its components. Comprehensive loss for
Janex is the same as net loss for all periods presented.
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<PAGE>
3. INVENTORIES
Inventories are valued at the lower of cost or market and consist of the
following at September 30, 1999 and December 31, 1998:
December 31, September 30,
1998 1999
-------- --------
Finished goods $131,098 $ 19,152
Work-in-process -- --
-------- --------
$131,098 $ 19,152
======== ========
4. NOTE PAYABLE - OTHER
Janex may borrow up to $400,000 under a line of credit agreement with a bank.
Borrowings under the line bear interest at the bank's prime rate plus 0.25
percent (8.50 percent at September 30, 1999). The line is collateralized by all
of Janex's assets and is personally guaranteed by two shareholders. Borrowings
under the line have been extended to December 31, 1999 from the original due
date of July 1, 1999. Borrowing capacity of $143,057 is available at September
30, 1999.
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<PAGE>
5. SEGMENT INFORMATION
A summary of Janex's operations by geographical area for the nine months
ended September 30, 1998, and 1999 were as follows:
<TABLE>
<CAPTION>
Adjustments
United Hong and
States Kong Eliminations Consolidated
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1998
Net sales:
Customers $ 69,513 $ 2,910,126 $ -- $ 2,979,639
Intercompany -- 1,952 (1,952) --
----------- ----------- ----------- -----------
Total revenue 69,513 2,912,078 (1,952) 2,979,639
Operating income (loss) (1,054,206) 761,390 -- (292,816)
Interest expense (148,825) (21,488) -- (170,313)
Depreciation and amortization (122,937) (133,572) -- (256,509)
</TABLE>
<TABLE>
<CAPTION>
Adjustments
United Hong and
States Kong Eliminations Consolidated
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1999
Net sales:
Customers $ 119,354 $ 173,023 $ -- $ 292,377
Intercompany -- -- -- --
----------- ----------- ----------- -----------
Total revenue 119,354 173,023 292,377
Operating loss (704,946) (151,617) -- (856,563)
Interest expense (20,070) 405 -- (19,665)
Depreciation and amortization (89,068) (155,506) -- (244,574)
</TABLE>
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<PAGE>
JANEX INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
CONSOLIDATED RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
1998:
NET SALES
For nine months ended September 30, 1999, net sales decreased by $2,687,262 or
90%, to $292,377, as compared to net sales of $2,979,639 for the nine months
ended September 30, 1998. The decrease in net sales is a result of several
factors. There was an apparent lack of any popular licenses in the marketplace.
As a result, many of the customers of Janex are not willing to make large
inventory commitments. Additionally, some customers have experienced an
overstocking of inventory, due to previously purchased inventory not selling as
expected.
At September 30, 1999, Janex had a backlog of unfilled orders of approximately
$111,000 compared to its order backlog of approximately $350,000 at September
30, 1998. Although Janex has noted a general decrease in order flow in 1999, as
compared to prior years, the present backlog is not necessarily indicative of
net sales to be expected for the fiscal year ending December 31, 1999.
GROSS MARGIN
For the nine months ended September 30, 1999, gross margin was ($120,008), or
(41%) of net sales, as compared to a gross margin of $1,015,584, or 34% of net
sales, for the nine months ended September 30, 1998. Janex typically establishes
prices to obtain a target gross margin ranging from 45% to 50%, but overall
gross margin can vary depending on the sales mix in each quarter. The decrease
in gross margin in 1999, as compared to 1998, was the result of a write-off of
prepaid royalties in the amount of $142,944 that were determined to have no
value, as well as a decision to sell $115,683 in certain slow-moving inventory
at little or no profit.
ROYALTY EXPENSE
For the nine months ended September 30, 1999, royalty expense was $173,503, or
59% of net sales, as compared to $344,350, or 12% of net sales, for the nine
months ended September 30, 1998. The increase in royalty expense as compared to
net sales for the nine months ending September 30, 1999 was a result of
management's decision to expense $142,944 in unapplied prepaid royalties that
were determined to have no future associated sales.
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<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
For the nine months ended September 30, 1999, selling, general and
administrative expenses decreased by $559,910, or 53%, to $491,981, or 168% of
net sales, as compared to $1,051,891, or 35% of net sales, for the nine months
ended September 30, 1998. Selling, general and administrative expenses are
comprised of fixed overhead costs and variable selling expenses. The decrease in
fixed selling, general and administrative expenses is a direct result of
management's continuing effort to reduce fixed overhead costs. Management
primarily accomplished this through reductions in payroll ($44,205), agent
commissions ($115,850), travel ($66,656), and product testing/handling
($131,968).
LIQUIDITY AND CAPITAL RESOURCES
Janex's cash balance decreased by $44,648 to $17,764 at September 30, 1999, as
compared to $62,412 at December 31, 1998. Janex's net working capital decreased
by $607,082 from a working capital deficit of $2,242,661 at December 31, 1998 to
a working capital deficit of $2,849,743 at September 30, 1999, and Janex's
current ratio decreased to 0.13:1 at September 30, 1999, as compared to 0.16:1
at December 31, 1998.
Janex believes that its existing cash balance together with its existing line of
credit and projected cash flow from operations will not be sufficient to fund
projected order flow, overhead and debt repayment for the fiscal year ending
December 31, 1999. Janex has experienced recurring losses from operations,
negative cash flows and decreases in working capital.
Janex's ultimate ability to continue as a going concern depends on: (1) the
market acceptance of its products; (2) its generation of sufficient operating
profits; (3) its creation of a sustainable positive cash flow; and (4) obtaining
additional financial resources to provide near term operating cash. Management
believes that the financial resources from its majority shareholder, Futech, in
addition to sales generated from new product lines it is developing, will allow
Janex to continue in operation for fiscal year 1999.
Janex had negative cash flow from operating activities of $1,075,276 for the
nine months ended September 30, 1999, as compared to a negative operating cash
flow of $86,953 for the nine months ending September 30, 1998, as declining
sales have led to lower accounts receivable collections in 1999.
During the nine months ended September 30, 1999, Janex incurred costs for
additions to tooling and molds of $19,723 and costs for additions to product
development costs of $26,476. This compares to costs for additions to tooling
and molds related to new licenses of $81,575 and costs for additions to product
development costs of $92,990 for the nine months ended September 30, 1998.
Janex generated $1,076,827 from financing activities during the nine months
ended September 30, 1999, compared to $202,872 during the same period in 1998.
The cash generated in financing activities primarily came from proceeds of
advances from parent of $1,076,884.
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<PAGE>
Janex's capital commitments for 1999, include $37,500 for commitments for
minimum guaranteed royalties under licensing agreements. Janex also maintains a
non-cancelable operating lease on its former facility, although it subleases
that space for an amount approximating Janex's rent to the landlord. Future
minimum payments under this lease are $26,010 for 1999.
Janex may borrow up to $400,000 under a line of credit agreement with a bank.
Borrowings under the line bear interest at the bank's prime rate plus 0.25
percent (8.50 percent at September 30, 1999). The line is secured by all of
Janex's assets and is personally guaranteed by two shareholders. Borrowings
under the line are due December 31, 1999. Borrowing capacity of $143,057 was
available at September 30, 1999.
INFLATION
Management does not believe that inflation has had a significant impact on
Janex's costs and profits during the past two years.
YEAR 2000
The Year 2000 presents special concerns for business and consumer computing. The
Year 2000 issue is a result of computer programs being written using two digits
rather than four to define the year. Computer programs that have date-sensitive
functions may recognize a date using "00" as the year 1900 rather than the year
2000. This issue has grown in importance as the use of computers has become more
pervasive and the dependence on computers has increased. Janex could be
materially and adversely affected by the Year 2000 issue, either directly or
indirectly. This could occur as a result of a system failure or miscalculation
causing disruption to operations, including a temporary inability to process
transactions, send invoices, ship goods, or engage in similar, normal business
activities.
Failure of Janex to complete testing and renovation of its critical systems on a
timely basis could have a material, adverse effect on Janex's financial
condition and operating results, as could Year 2000 compliance problems
experienced by others with whom Janex does business. Because of the range of
possible issues and the large number of variables involved, it is impossible to
quantify the potential cost of problems should our efforts, or the efforts of
those companies with which we do business, not be successful.
All of Janex's information systems have been transferred to the systems of its
parent company, Futech. internal information systems are a client/server
environment. The information system has been tested by a third party computer
consulting firm and we believe this system is Year 2000 compliant. In addition
to the computer systems, we tested and have subsequently upgraded our telephone
systems and voice mail systems. We have also installed new hardware and software
for internal e-mail communications. All of the vendors for these upgrades have
represented to us that the systems are Year 2000 compliant.
Janex has not had formal communications with suppliers or customers to determine
the extent to which their failure to remedy their own Year 2000 compliance
problems would materially affect Janex. At this time we do not know whether the
subcontractors and suppliers will be able to deliver goods or services, or
whether customers will be able to place orders, beyond December 31, 1999. If our
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<PAGE>
suppliers are not able to provide necessary products or services to Janex as a
result of Year 2000 compliance problems, we may be forced to seek other
suppliers, and may be required to reduce or discontinue operations until the
problems are resolved. Additionally, if our major customers are not able to
function as a result of Year 2000 compliance problems, we may be forced to
substantially reduce or discontinue operations until the problems are resolved.
At this time Janex cannot be confident that there will not be a system failure.
Management's contingency plan is to use all Janex employees to manually perform
the duties that would normally be performed electronically in order to meet the
demands of customers. Our vendors and customers are much larger and more
financially viable than Janex. We believe because of their size and financial
resources, they will have instituted Year 2000 compliance programs to a much
larger degree than Janex. If these companies do not establish adequate Year 2000
resolutions, Janex may be forced to substantially reduce or discontinue
operations.
Any failure to address any unforeseen Year 2000 issue could adversely affect our
business, financial condition, and results of operations.
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this report that are subject to a
number of risks and uncertainties, including without limitation, those described
in our Annual Report on Form 10-KSB for the year ended December 31, 1998 and
other risks and uncertainties indicated form time to time in our filings with
the SEC. These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include the information concerning possible or
assumed future results of operations. Also, when we use words such as
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements. Readers should understand that the following
important factors, in addition to those discussed in the referenced SEC filings,
could affect our future financial results, and could cause actual results to
differ materially form those expressed in our forward-looking statements:
* the implementation of our growth strategy;
* the financial difficulties of Futech, Janex's parent company;
* the effects of the pending merger;
* the integration of acquisitions;
* the availability of additional capital;
* variations in stock prices and interest rates;
* fluctuations in quarterly operating results; and
* other risks and uncertainties described in our filings with the SEC.
We make no commitment to disclose any revisions to forward-looking statements,
or any facts, events or circumstances after the date hereof that may bear upon
forward-looking statements.
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<PAGE>
PART II OTHER INFORMATION
ITEM 5 OTHER INFORMATION
On June 7, 1999, Janex's Board of Directors authorized a merger
transaction whereby Janex and four other entities would merge into a
newly incorporated entity, known as Futech Interactive
Products(Delaware), Inc. The Proposed merger is described in Futech's
registration statement on Form S-4, as amended, filed with the SEC.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
27 Financial Data Schedule (electronic filing only)
(b) 8-K - A current report on Form 8-K was filed on October 1, 1999
to report the resignation of a director, Les Friedland, from
Janex's board of directors effective September 26, 1999.
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<PAGE>
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.
JANEX INTERNATIONAL, INC.
Registrant
Date: November 15, 1999 By: /s/ Vincent W. Goett
------------------------------------
Vincent W. Goett
President
Chief Executive Officer, Director
By: /s/ Fred B. Gretsch, Sr.
------------------------------------
Frederick B. Gretsch, Sr.
Chief Financial Officer
Treasurer and Secretary, Director
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 800454
<NAME> JANEX INTERNATIONAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 17,764
<SECURITIES> 0
<RECEIVABLES> 226,189
<ALLOWANCES> 25,955
<INVENTORY> 19,152
<CURRENT-ASSETS> 326,127
<PP&E> 1,992,419
<DEPRECIATION> 1,854,130
<TOTAL-ASSETS> 806,935
<CURRENT-LIABILITIES> 3,267,110
<BONDS> 0
0
569,022
<COMMON> 12,803,327
<OTHER-SE> (15,832,524)
<TOTAL-LIABILITY-AND-EQUITY> 806,935
<SALES> 292,377
<TOTAL-REVENUES> 292,377
<CGS> 238,882
<TOTAL-COSTS> 1,148,941
<OTHER-EXPENSES> 288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,665
<INCOME-PRETAX> (876,517)
<INCOME-TAX> (4,725)
<INCOME-CONTINUING> (881,242)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (881,242)
<EPS-BASIC> 0.05
<EPS-DILUTED> 0
</TABLE>
