<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACTS OF 1934
Commission File No. 33-9030
MAGNAVISION CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE 22-2741313
- --------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
1725 ROUTE 35, WALL, NEW JERSEY 07719
- -------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (732) 449-1200
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: NONE
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 [ ] No [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant is not available due to the unavailability of price quotations for
the Registrant's securities.
The number of shares of Registrant's Common Stock outstanding on July 9, 1998
was 1,154,390.
Documents Incorporated by Reference: None.
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1998 and December 31, 1997
Condensed Consolidated Statements of Operations - Three and Six months ended
June 30, 1998 and 1997.
Condensed Consolidated Statements of Stockholders' Deficiency - Period
December 31, 1997 to June 30, 1998.
Condensed Consolidated Statements of Cash Flows - Six months ended June 30,
1998 and 1997.
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. Other Information
<PAGE>
ITEM 1. FINANCIAL INFORMATION
MAGNAVISION CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
ASSETS 1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash 101,547 141,546
Trade Accounts and Other Receivables 172,243 236,375
Prepaid Expenses 8,516 8,516
-------------------------------
Total Current Assets 282,306 386,437
-------------------------------
PROPERTY AND EQUIPMENT
Property and Equipment at Cost 2,369,564 1,944,558
Less: Accumulated Depreciation (933,375) (748,375)
-------------------------------
Net Property and Equipment 1,436,189 1,196,183
OTHER ASSETS
Shareholder Loans Receivable 43,810 43,810
Prepaid lease expense 597,200 650,684
Deferred financing cost, net of accumulated amortization 114,378 145,496
Deposits 3,764 4,553
-------------------------------
TOTAL ASSETS 2,477,647 2,427,163
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses 404,604 443,717
Deferred Revenues 562,963 214,490
Current Portion of Long-Term Debt 4,225 4,225
Income Taxes Payable 741 741
Term Loan 105,468 105,468
-------------------------------
Total Current Liabilities 1,078,001 768,641
LONG-TERM LIABILITIES
Line of Credit 585,005 405,295
Security Deposits 152,065 152,065
Long-Term Debt 5,032 6,041
Commitments and contingencies
Series A Preferred Stock 9,850,000
shares authorized; issued and outstanding, 5,000,000 4,544,753 4,498,456
shares, net of unamortized discount
SHAREHOLDERS' DEFICIENCY
Series B Preferred Stock, 150,000 shares 131,889 131,889
authorized; issued and outstanding, 131,889 shares
Common Stock, $0.08 par value - 10,000,000 shares authorized; issued and
outstanding, 1,154,390 shares in June 30,1998 and 1,152,510 shares
December 31, 1997 92,350 92,200
Additional Paid-In Capital 3,880,601 3,876,991
Accumulated Deficit (7,992,049) (7,504,415)
-------------------------------
Total Shareholder's Deficiency (3,887,209) (3,403,335)
-------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY 2,477,647 2,427,163
========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements. F-2
<PAGE>
MAGNAVISION CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30 Three months ended June 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Gross Revenues 960,555 727,461 426,465 320,803
Cost of Sales 363,860 248,804 144,120 119,686
-------- -------- -------- --------
GROSS PROFIT 596,695 478,657 282,345 201,117
OPERATING EXPENSES
Salaries 298,941 308,774 159,566 151,602
Depreciation 185,000 112,604 92,700 49,830
General and Administrative Expenses 490,139 471,070 262,679 289,742
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 974,080 892,448 514,945 491,174
OPERATING LOSS (377,385) (413,791) (232,600) (290,057)
OTHER INCOME (expense)
Interest expense (74,804) (181,846) (36,041) (59,503)
Interest Income 15,033 15,392 7,501 7,778
-------- -------- -------- --------
Total other income (expense) (59,771) (166,454) (28,540) (51,725)
LOSS BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM (437,156) (580,245) (261,140) (341,782)
PROVISION FOR INCOME TAX 4,181 3,890 15 1
-------- -------- -------- --------
LOSS BEFORE EXRAORDINARY ITEM (441,337) (584,135) (261,155) (341,783)
-------- -------- -------- --------
EXTRAORDINARY ITEM - LOSS ON EXTINGUISHMENT OF DEBT -- 275,844 275,844
-------- -------- --------
NET LOSS (441,337) (859,979) (261,155) (617,627)
-------- -------- -------- --------
Preferred Stockholders Dividend Requirement 200,000 57,778 100,000 57,778
Net loss to Common Stockholders (641,337) (917,757) (361,155) (675,405)
Net Loss per Common Share Basic:
Loss before extraordinary item (0.56) (0.56) (0.31) (0.35)
Extraordinary item -- (0.24) -- (0.24)
Net loss (0.56) (0.80) (0.31) (0.59)
Weighted Average Shares used to Compute net loss per share:
Basic 1,154,317 1,152,482 1,154,390 1,152,575
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements. F-3
<PAGE>
<TABLE>
<CAPTION>
MAGNAVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
For the period December 31, 1997 to June 30,1998
(UNAUDITED)
Series B Common Common Additional
Preferred Stock Stock Stock Paid in Accumulated Total
Shares Amount Shares(1) Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,1997 131,889 131,889 1,152,510 92,200 3,876,991 (7,504,415) (3,403,335)
Common Stock Issued
Jan 1, 1997 to June 30, 1998 -- -- 1,880 150 3,610 -- 3,760
Accretion of Warrants (46,297) (46,297)
Net loss (441,337) (441,337)
------------------------------------------------------------------------------------------
Balance, June 30, 1998 131,889 131,889 1,154,390 92,350 3,880,601 (7,992,049) (3,887,209)
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements. F-4
<PAGE>
MAGNAVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss (441,337) (859,979)
Adjustments to Reconcile Net Loss to Net Cash provided by (used in) operating activities
Extraordinary item -- 275,844
Depreciation and Amortization 185,000 95,003
Amortization of deferred financing costs 31,118 17,601
Amortization of channel lease prepayments 53,484 53,484
Changes in Assets and Liabilities:
Decrease in Trade Accounts and
Other Receivables 64,132 30,452
Decrease in Prepaid Expenses -- 1,000
Decrease in Deposits 789 --
(Decrease) increase in Accounts Payable and
Accrued Expenses (39,113) 216,408
Increase in Security Deposits -- 13,629
Increase (decrease) in Deferred Revenues 348,473 (92,156)
-------- --------
Net cash provided by (used in) operating activities 202,546 (248,714)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loan to shareholders -- 483
Purchase of property and equipment (425,006) (262,818)
--------------------------
Net cash used in investing activities (425,006) (262,335)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of Long term debt (1,009) (1,742)
Decrease in Due to Shareholders -- (8,000)
Proceeds of Issuance of Preferred Stock, net -- 863,811
Proceeds from Issuance of Common Stock 3,760 707
Proceeds from Issuance of Access Capital line of credit 179,710 --
--------------------------
Net cash provided by financing activities 182,461 854,776
Net (decrease) increase in cash (39,999) 343,727
-------- --------
Cash beginning of period 141,546 164,296
Cash end of period 101,547 508,023
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements. F-5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
1. Summary of Significant Accounting Policies:
The accompanying Condensed Financial Statements include the accounts of
Magnavision Corporation ("the Parent") and its wholly owned subsidiaries,
(collectively the "Company"), the most significant of which are Magnavision
Corporation (New Jersey), Magnavision Private Cable, Inc. and Magnavision
Wireless Cable, Inc. In the opinion of management, all adjustments necessary
for a fair presentation of financial statements have been included. Such
adjustments consisted only of normal reoccurring items. The condensed
financial statements for the quarters ending June 30, 1998 and June 30, 1997
are unaudited and should be read in conjunction with the Company's
consolidated annual financial statements and notes thereto for the year ending
December 31, 1997. Effective at the end of June, the Company merged Accu-Trek,
Inc. and University Connection, Inc. into Magnavision Corporation (New
Jersey). These subsidiaries had no assets, liabilities or operations
therefore, the transaction had no impact on the Company's financial
statements.
2. Exchange of Senior Subordinated Notes into Redeemable Preferred Stock
On May 8, 1997, the Company agreed with its lenders to exchange its senior
subordinated notes into redeemable preferred stock. Under the terms thereof,
the Company's outstanding subordinated notes, aggregating approximately $4.1
million, together with accrued interest and detachable warrants, were
exchanged for $5 million of 8% redeemable preferred stock due December 31,
2002. In connection with the exchange the note holders received 1,826,932
warrants to purchase up to 58% of the common stock on a fully diluted basis at
an exercise price of $2.00 per share after the Company effected a 1-for-20
reverse stock split, and have the right, which they have exercised, to elect
the majority of the Board of Directors. This resulted in a change in control
of the Company. The agreement also requires the warrant holders to surrender
up to 10% of their stock on a fully diluted basis, if, as and when certain
liquidity events occur. In addition, warrant holders have the right to require
the Company to repurchase the warrants under certain conditions. The value of
the warrants was estimated at $555,556 and represents a discount to the face
value of the redeemable preferred stock. The cost of the put can not be
determined at this time since it is based upon the value of a sale of
significant asset which cannot be assured. Also, one of the warrant holders
has entered into a management service agreement with the Company.
In connection with the exchange, the lenders agreed to issue one year
unsecured notes totaling $105,468 with interest at 10% payable at maturity.
The Company and the Preferred Stockholders further agreed to extend the
maturity of the unsecured notes to May 8, 1999. The Company wrote off the
unamortized deferred finance costs related to the subordinated notes, which
has been classified as an extraordinary item in the accompanying financial
statement.
3. Line of Credit
In September 1997 the Company and Access Capital, Inc. agreed to a $1,250,000
three-year revolving line of credit to be used to expand the Company's private
cable business. As of June 30, 1998 the Company had borrowed $585,005 under
the line of credit. Interest is payable currently under the line of credit at
prime rate plus five and one-half percent (the contract rate) and all
outstanding amounts are payable in September 2000. The line is secured with
the lender by a pledge of private cable contracts and all other
<PAGE>
Company assets. In addition the lender received 138,536 warrants at an
exercise price of $2.00 per share to purchase approximately 4% of the
Company's stock on a fully diluted basis. The warrants contain a put and call
option in the event that the Company sells a significant asset. The put option
requires the Company to purchase a percentage of the lenders' warrants as
required by a formula outlined in the amended agreement. This option can only
be exercised upon the sale of a significant asset of the Company or change of
control. Conversely, the call option allows the Company to purchase all the
outstanding warrants at a price set by the formula stated above. The cost of
either the put or call option can not be determined at this time since it is
based upon the value of a sale of a significant asset which cannot be assured.
Subsequent to fiscal year ended December 31, 1997, the Company had not met
certain non-monetary working capital covenants under the Agreement and the
lender instituted the default interest rate, such rate is two and one-half
percent over the contract rate. As a result, the outstanding balance has been
classified as a current liability in the accompanying balance sheet. The
lender has continued to lend funds under the Agreement. The Company requested
a waiver thereof together with a separate working capital advance.
Effective July 3, 1998 the company and BSB Bank and Trust Company entered into
an agreement to refinance its existing credit line and supply working capital.
Pursuant thereto, Magnavision borrowed the sum of $2.5 million dollars which
bears interest at a fixed rate of 10% per annum and has a 5 year term.
Installments of principal plus interest, payable in arrears, will be made in
accordance with an agreed upon schedule. The loan was utilized to refinance
existing debt and the remaining approximately $1.9 million will be used to
finance the completion of outstanding contracts for private cable television
service at various locations and to complete the Fordham University Internet
distribution system currently under contract. BSB Bank & Trust Company also
granted the Company a $500,000 line of credit, to be used for future
installations of private cable systems and general corporate purposes. This
line of credit will be at an interest rate of prime plus 1.5% payable monthly
and will mature in 2 years. In connection with the above transaction BSB Bank
& Trust Company received warrants to purchase approximately 4% of
MagnaVision's issued and outstanding capital stock on a fully diluted basis.
4. Equity Transaction
During the first quarter of 1998 warrant holders exercised warrants to
purchase 1,880 shares of common stock at $2.00 per share.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All of the Company's current revenues are derived from its private cable
operations. The wireless channel capacity operations have not commenced;
therefore, no revenue has been derived from the wireless operation.
The Registrant and its wholly owned subsidiary, Magnavision Private Cable,
Inc., began
<PAGE>
service in February 1992 to various colleges and senior living centers
facilities in the New York/New Jersey area utilizing direct satellite
technology. This involves the use of antennas, which are installed at the
facility and then separately wired on a room-by-room basis. As of June 30,
1998, the Company has long-term agreements with 38 facilities under which it
is currently providing service to students and patients through outlets in
rooms and common areas at such institutional facilities. In May 1998, the
Company entered into an Agreement with Fordham University pursuant to which
the Company agreed to service approximately 3,000 students with a data
delivery system using the existing cable television distribution system
located at certain facilities. This service will commence in the fall of 1998.
The Company expects additional contracts to be signed in the near future and
is in the process of installing additional outlets, which it intends to
complete by year end. The majority of the facilities using the Company's
private cable service are in New Jersey and New York, but the Company's market
area currently reaches from North Carolina to Massachusetts and west to
Wisconsin.
Many colleges and senior living centers in the United States do not have cable
television, but the current trend is for these institutions to install cable
television. Management believes that this trend, coupled with the fact that
the Company can offer cable services normally not provided by the traditional
wired cable companies, should result in significant subscriber expansion in
the future. Each installation is comprised of a number of billing outlets. A
billing outlet represents a hookup for a television. The Company collects
revenue from each television on-line. For the most part, the colleges are on a
nine-month billing cycle starting in September and ending in June of the
subsequent year. The nursing homes and hospitals are on a 12-month billing
cycle.
Six Months Ending June 30, 1998 Compared to Six Months Ending June 30, 1997
For the six months ending June 30, 1998 gross profit increased $118,038 over
the six months ending June 30, 1997. The increase was primarily a result of
increased outlets on line in September 1997.
Total operating expenses increased $81,632 in the six months ending June 30,
1998 when compared to the six months ending June 30, 1997. Depreciation
represented $72,396 of the increase and relates to the purchase of additional
equipment. General and administrative expenses account for the balance of the
increase and includes increased consulting fees in 1998.
Interest expense decreased $107,042 in the first six months of 1998 when
compared to the first six months of 1997. This decrease is due to the exchange
of senior debt for redeemable preferred stock in 1997 offset by the interest
for the line of credit in 1998.
The extraordinary item was for the write off of deferred financing costs upon
the extinguishment of debt after the conversion to redeemable preferred stock
in the second quarter of 1997.
Second Quarter 1998 Compared to Second Quarter 1997
For the second quarter 1998, gross profits increased $81,228 over the first
quarter of 1997. The increase was primarily a result of the outlets that went
on line in September
<PAGE>
1997 and the addition of facilities in the first quarter of 1998.
Total operating expenses increased $23,771 in the second quarter of 1998 when
compared to the second quarter 1997. Depreciation accounted for the majority
of the increase and relates to increased property and equipment.
Interest expense decreased $23,462 in the second quarter of 1998 when compared
to the first quarter 1997. This decrease is due to the exchange of senior debt
for redeemable preferred stock in 1997 offset by the interest for the line of
credit in 1998.
The extraordinary item was for the write off of deferred financing costs upon
the extinguishment of debt after the conversion to redeemable preferred stock
in the second quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ending June 30, 1998, total cash decreased by $39,999. The
cash from operating activities was $202,546 mainly due to an increase in
deferred revenues for the data system being built at Fordham offset by
operating losses.
Cash used in investing activities was $425,006 and was used to purchase cable
television and equipment to increase the outlet count and data system
equipment for Fordham.
Cash flows from financing activities were $182,461 and primarily represent
proceeds from the credit line.
For the six months ending June 30, 1997, total cash increased by $343,727. The
net cash used in operating activities was $248,714 and is primarily due to
operating losses.
Cash used in investing activities for the six months ended June 30, 1997 was
$262,335 and related to the purchase of cable equipment to increase the outlet
count.
Cash flows provided by financing activities was $854,776 for the six-month
period ending June 30, 1997 which primarily represented the proceeds received
in the conversion of outstanding debt to preferred stock.
Since the inception of its cable service in 1992, the Company has experienced
operating losses and negative cash flows. In addition, at June 30, 1998 the
Company had a shareholder deficit.
The Company's capital commitments at June 30, 1998 include capital to
construct Facilities at the Department of Education of the Archdiocese of New
York (the "Archdiocese") and capital to place private cable systems on line at
institutions the company has contracts with. The Company has also signed a
long-term agreement with Fordham University to supply a data distribution
system for the University. In connection with this contract the University has
issued notes for the purchase of part of this system.
<PAGE>
The Company intends to borrow the funds under its proposed restructured line
of credit to complete the project. The Company has not commenced operation of
a wireless system, and will require substantial additional funding to do so.
In addition, the Company is exploring various strategic alternatives relating
to its Channel Lease Agreement with the Archdiocese including potential
strategic alliances, joint ventures or a sale or other disposition of the
Company's rights under such agreement. Also, management believes that the
continued expansion of the Company's private cable operations should produce
positive cash flows in the future. However, no assurances can be given that
the Company will successfully accomplish any strategic alternative related to
the Channel Lease Agreement, or expand the private cable operations to produce
positive cash flows, on a timely basis or at all.
In September 1997, the Company and Access Capital, Inc. agreed to a $1,250,000
three-year revolving line of credit to be used to expand the Company's private
cable business. As of June 30, 1998, the Company had borrowed $585,005 under
the line of credit. Interest is payable currently at the default rate of prime
plus 8% and is current. The line is secured by a pledge of private cable
contracts and all other Company assets. The lender received warrants at an
exercise price of $2.00 per share to purchase approximately 4% of the
Company's common stock on a fully diluted basis.
At June 30, 1998, the Company was not in compliance with certain covenants
under the line of credit and such defaults continue through the date hereof.
In connection therewith, the Company requested a waiver thereof together with
a separate working capital advance. By letter dated May 8, 1998 Access Capital
proposed a restructuring of the financial covenants, an increase in the line
of credit to $3 million dollars and an increase in its warrant ownership of
the Company, which the Company did not accept.
Effective July 3, 1998 the company and BSB Bank and Trust Company entered into
an agreement to refinance its existing credit line and supply working capital.
Pursuant thereto, Magnavision borrowed the sum of $2.5 million dollars which
bears interest at a fixed rate of 10% per annum and has a 5 year term.
Installments of principal plus interest, payable in arrears, will be made in
accordance with an agreed upon schedule. The loan was utilized to refinance
existing debt and the remaining approximately $1.9 million will be used to
finance the completion of outstanding contracts for private cable television
service at various locations and to complete the Fordham University Internet
distribution system currently under contract. BSB Bank & Trust Company also
granted the Company a $500,000 line of credit, to be used for future
installations of private cable systems and general corporate purposes. This
line of credit will be at an interest rate of prime plus 1.5% payable monthly
and will mature in 2 years. In connection with the above transaction BSB Bank
& Trust Company received warrants to purchase approximately 4% of
MagnaVision's issued and outstanding capital stock on a fully diluted basis.
Management believes that inflation and changing prices will have a minimal
effect on operations.
<PAGE>
The above should be read in conjunction with the Company's condensed
consolidated financial statements included elsewhere herein.
Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward- looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to
be materially different from any future results, performance or achievements
of the Company, or industry results expressed or implied by such
forward-looking statements. Such factors include among others, general
economic and business conditions, which will, among other things, impact
demand for the Company's services; changes in public taste, trends and
demographic changes; competition from other SMATV and/or cable companies,
which may affect the Company's ability to generate revenues; political, social
and economic conditions and laws, rules and regulations, which may affect the
Company's results of operations; timely completion of construction projects
for new systems; changes in business strategy or development plans; the
significant indebtedness of the Company; quality of management; availability
of qualified personnel; changes in, or the failure to comply with, government
regulations; and other factors.
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the Quarter
ending June 30, 1998
Pursuant to the Requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 14, 1998 ------------------------
Jeffrey Haertlein
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 101,547
<SECURITIES> 0
<RECEIVABLES> 172,243
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 282,306
<PP&E> 2,369,564
<DEPRECIATION> 933,375
<TOTAL-ASSETS> 2,477,647
<CURRENT-LIABILITIES> 1,078,001
<BONDS> 0
4,544,753
0
<COMMON> (3,887,209)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,477,647
<SALES> 960,555
<TOTAL-REVENUES> 960,555
<CGS> 0
<TOTAL-COSTS> 363,860
<OTHER-EXPENSES> 974,080
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,804
<INCOME-PRETAX> (437,156)
<INCOME-TAX> 4,181
<INCOME-CONTINUING> (441,337)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (.56)
<EPS-DILUTED> (.56)
</TABLE>
