<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: March 31, 1997
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: 0-17118
Mark Solutions, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-2864481
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
Parkway Technical Center
1515 Broad Street
Bloomfield, New Jersey 07003
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (201) 893-0500
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check whether 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 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:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date:
Common Stock, $ .01 par value: 14,755,467 shares outstanding as of May 13, 1997.
<PAGE>
MARK SOLUTIONS, INC.
Form 10-Q
for
Quarter Ended March 31, 1997
Index
Part I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1997 and June 30, 1996 ........ 3
Consolidated Statements of Operations
for the Nine Months Ended
March 31, 1997 and March 31, 1996 ....... 5
Consolidated Statements of Cash Flows
for the Nine Months Ended March 31,
1997 and March 31, 1996 ................. 6
Notes to Consolidated Financial Statements ... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................. 9
Part II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . 12
Item 2. Changes in Securities ........................ 12
Item 6. Exhibits and Reports on Form 8-K ............. 12
Signatures 13
<PAGE>
Mark Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Assets
March 31, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 37,924 $ 263,922
Restricted cash 18,861 181,781
Accounts receivable 2,299,139 904,596
Inventories 943,965 146,305
Other current assets 110,125 133,325
---------- ----------
Total Current Assets $3,410,014 $1,629,929
Property and Equipment:
Machinery and equipment 1,488,255 1,472,528
Demonstration equipment 436,348 395,419
Office furniture and equipment 378,594 324,006
Leasehold improvements 41,568 14,254
Vehicles 62,283 68,783
Property held under capital lease --- 40,929
---------- ----------
Total 2,407,048 2,315,919
Less: Accumulated depreciation
and amortization 2,047,565 1,939,415
---------- ----------
Net Property and Equipment 359,483 376,504
Other Assets:
Costs in excess of net assets
of businesses acquired, less accumulated
amortization of $174,950 and $17,495 at
March 31, 1997 and June 30, 1996,
respectively 874,741 1,032,196
Debt issue costs, less accumulated amortization
of $47,454 at March 31, 1997 115,246 ---
Other assets 79,549 45,134
---------- ----------
Total Other Assets 1,069,536 1,077,330
---------- ----------
Total Assets $4,839,033 $3,083,763
========== ==========
</TABLE>
- 3 -
<PAGE>
Mark Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
March 31, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 1,330,900 $ 499,254
Short-term borrowings 250,000 ---
Current maturities of long-term debt 97,434 80,558
Current portion of obligations under capital leases --- 5,921
Due to related parties 204,076 45,194
Accrued liabilities 165,373 323,138
----------- ----------
Total Current Liabilities $ 2,047,783 $ 954,065
Other Liabilities:
Long-term debt excluding current maturities 1,739,343 19,989
Long-term portion of obligations under
capital leases --- 30,308
----------- ----------
Total Other Liabilities 1,739,343 50,297
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.01 par value,
25,000,000 shares authorized,
14,616,282 shares issued and
outstanding at March 31, 1997
and 13,576,315 shares issued and
outstanding at June 30, 1996 144,850 135,762
Additional paid-in capital 26,222,518 24,260,299
Retained earnings (deficit) (25,315,461) (22,316,660)
---------- ----------
Total Stockholders' Equity 1,051,907 2,079,401
--------- ---------
Total Liabilities and Stockholders' Equity $ 4,839,033 $ 3,083,763
========= ==========
</TABLE>
-4-
Mark Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31 March 31
----------------------------- -----------------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Sales $ 3,276,578 $ 3,206,371 $ 1,581,371 $ 655,879
----------- ----------- ----------- ----------
Cost and Expenses:
Cost of sales 2,665,643 3,656,949 1,307,268 749,210
Selling, general and administrative 2,899,160 2,807,949 1,076,520 808,724
----------- ----------- ----------- ----------
Total Costs and Expenses 5,564,803 6,464,898 2,383,788 1,557,934
----------- ----------- ----------- ----------
Operating (Loss) (2,288,225) (3,258,527) (802,417) (902,055)
---------- ----------- ----------- ----------
Other Income (Expense):
Interest earned 21,272 20,167 4,126 8,123
Interest expense (728,728) (8,344) (203,145) (3,365)
Loss on asset disposal (3,120) (72,117) --- (72,117)
Gain on sale of equipment --- 12,116 --- 12,116
----------- ----------- ----------- ----------
Net Other Income (Expense) (710,576) (48,178) (199,019) (55,243)
----------- ----------- ----------- ----------
(Loss) From Continuing Operations (2,998,801) (3,306,705) (1,001,436) (957,298)
----------- ----------- ----------- ----------
Discontinued Operations:
Loss of Bar-Lor Subsidiaries --- (35,078) --- ---
Loss on disposal of Bar-Lor Subsidiaries --- (69,425) --- ---
----------- ----------- ----------- ----------
Loss From Discontinued Operations --- (104,503) --- ---
----------- ----------- ----------- ----------
Net (Loss) $ (2,998,801) $ (3,411,208) $ (1,001,436) $ (957,298)
============ ============ ============ ===========
(Loss) Per Share $ (.21) $ (.27) $ (.10) $ (.07)
============ ============ ============ ===========
Weighted Average Shares Outstanding 13,974,665 12,500,250 14,475,378 12,923,356
============ ============ ============ ============
Dividends Paid $ - 0 - $ - 0 - $ - 0 - $ - 0 -
============ ========== ========== ==========
-5-
<PAGE>
Mark Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
March 31, 1997 March 31, 1996
----------------------------- -----------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net (loss) $ (2,998,801) $ (3,411,208)
Adjustments to reconcile net (loss) to
net cash (used for) operating activities:
Depreciation and amortization $ 316,453 $ 466,350
Imputed and accrued interest expense on
convertible debt 637,810 ---
Loss from discontinued operations --- 104,503
Loss on asset disposal --- 60,001
Loss on sale of equipment 3,120 ---
(Increase) decrease in assets:
Restricted cash 162,920 58,269
Accounts receivable (1,394,543) 344,016
Costs and estimated earnings in excess
of billings on contract in process --- (95,714)
Inventories (797,660) (53,724)
Other current assets 23,200 (109,226)
Other assets (34,415) (67,154)
Increase (decrease) in liabilities:
Accounts payable 831,646 (869,801)
Due to related parties 158,882 (162,036)
Accrued liabilities (157,765) (50,934)
---------- ---------
Net adjustments to reconcile net (loss)
to net cash (used for) operating activities (250,352) (375,450)
--------- ---------
Net Cash (Used for) Operating Activities (3,249,153) (3,786,658)
Cash Flows From Investing Activities:
Additions to property and equipment (97,629) (35,437)
Proceeds from disposition of segment --- 100,000
Proceeds on sale of assets --- 12,500
---------- ---------
Net Cash Provided by (Used for) Investing Activities (97,629) 77,063
Cash Flows From Financing Activities:
Repayment of notes payable for equipment --- (25,394)
Proceeds from short-term borrowings 250,000 ---
Proceeds from convertible debt 2,950,000 ---
Increase from notes payable to bank 12,649 ---
Repayment of notes payable to bank (12,561) ---
Payment of offering costs and commissions --- (6,092)
Proceeds from issuance of common stock 105,894 3,639,477
Debt issue costs (162,700) ---
Payment of issuance costs (22,498) ---
---------- ---------
Net Cash Provided by Financing Activities 3,120,784 3,607,991
---------- ----------
Net (Decrease) in Cash (225,998) (101,604)
Cash at Beginning of Year 263,922 116,704
---------- ----------
Cash at End of Period $ 37,924 $ 15,100
========== ==========
</TABLE>
-6-
<PAGE>
Mark Solutions, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Financial Statement Presentation:
In the opinion of management, the accompanying consolidated financial
statements contain all normal and recurring adjustments necessary to present
fairly the financial position of Mark Solutions, Inc. and Subsidiaries (the
"Company") as of March 31, 1997 and June 30, 1996 and the results of operations
and cash flows for the nine months ended March 31, 1997 and 1996.
The accounting policies followed by the Company are set forth in the
Notes to Financial Statements included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996 and such notes are incorporated
herein by reference.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full fiscal year.
Convertible Debenture Conversion Discount- The conversion discount
rate to market value of convertible debentures to common stock is recorded as
interest expense over the period from the sale of the debentures to the first
conversion date.
Certain reclassifications have been made to the current and prior year
amounts to conform to the current period presentation.
Note 2 - Inventories:
Inventories at March 31, 1997 and June 30, 1996 consist of the following:
March 31, 1997 June 30, 1996
-------------- -------------
Raw materials $ 717,413 $ 127,477
Finished goods 226,552 18,828
----------- ----------
$ 943,965 $ 146,305
=========== ==========
Note 3 - Short-Term Borrowings:
The Company has available a bank line of credit based on 60% of
eligible accounts receivable and 32% of the appraised value of eligible
machinery and equipment, not to exceed the line of credit amount of $400,000.
The above revolving credit is collateralized by substantially all of the
Company's assets plus the personal guarantee of the Company's president.
Interest is payable monthly at 1-1/2% above the bank's prime rate and is due
March 1998.
- 7 -
<PAGE>
Note 4 - Convertible Debentures:
On August 23, 1996, the Company sold $ 2,200,000 principal amount 7%
convertible debentures due August 22, 1998 (the "1996 Debentures"). On December
26, 1996, the terms of the 1996 Debentures were amended to (i) prohibit
additional conversions until March 31, 1997 unless the trading price of the
common stock reaches levels in excess of $ 3.00 per share and (ii) modify the
conversion price to the lesser of (a) $ 1.38 or (b) 80% of the average closing
bid price on the five trading days immediately preceding the date(s) of
conversion. The outstanding balance of $ 950,000 as of March 31, 1997 is
included in long-term debt excluding current maturities on the accompanying
balance sheet.
In connection with the issuance of the 1996 Debentures, the Company
incurred $ 162,700 of debt issue costs. These costs have been capitalized and
are amortized over the term of the 1996 Debentures.
On January 21, 1997, the Company sold $ 750,000 principal amount 7%
convertible debentures due January 20, 1999 (the "1997 Debentures"). The 1997
Debentures are convertible, on or after July 15, 1997, into shares of common
stock at a conversion price which is the lesser of (i) $ 2.125 or (ii) 80% of
the average closing bid price on the five trading days immediately preceding the
date(s) of conversion. Interest on the Debentures is payable in cash or common
stock at the Company's option.
Included in interest expense for the period ended March 31, 1997 is $
590,000 of imputed interest which represents the twenty percent discount on
conversion of each of the above convertible debentures into common stock.
Note 5 - Common Stock and Additional Paid-In Capital:
During the nine months ended March 31, 1997, the Company issued 43,572
shares of common stock as a result of exercise of warrants, receiving gross
proceeds of $ 105,894.
Note 6 - Legal Proceedings:
On March 3, 1997 a verdict was received in favor of the Company on
the complaint of JTF Management Associates Ltd. and Joel Fishman alleging
commissions of $ 10,000,000 due from the Company. The Company was not awarded
any damages on its counterclaims.
- 8 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
Mark Solutions, Inc.'s (the "Company") results of operations, liquidity,
and working capital position have been historically impacted by sporadic sales
of its principal products, modular steel cells. This sales pattern is primarily
the result of the construction industry's unfamiliarity with the Company's
products and the emergence of competition.
The Company's modular steel products represent an alternative to
traditional concrete construction methods, and penetration into the construction
market has met resistance typically associated with an unfamiliar product.
Accordingly, the Company has been, and will continue to be, subject to
significant sales fluctuations until its modular cell technology receives
greater acceptance in the construction market, which management believes will
occur as new projects are awarded and completed. In an attempt to achieve
greater acceptance in the architectural, engineering and construction
communities, the Company's internal sales and engineering personnel and its
nationwide network of independent sales representatives conduct sales
presentations and participate in trade shows and other promotional activities.
The Company has expanded its marketing efforts to more aggressively pursue
domestic and international joint venture and design/build development
opportunities to obtain projects and improve its results of operations in
efforts to achieve profitability. Since January 1, 1996, the Company has reduced
office staff. From January 1996 to September 1996, the Company decided not to
occupy factory space, but outsourced the manufacturing of its small modular cell
projects to third party manufacturers. As of October 1996 the Company has
occupied new factory facilities. The Company will continue to review its
overhead and personnel expenses based on operating results and prospects.
The Company is continually bidding on and soliciting joint venture
opportunities regarding construction projects. The anticipated revenues from any
major project, would substantially improve the Company's operating results and
cash flow, although no assurances can be given that any of these projects will
be awarded to the Company. On July 17, 1996, the Company was awarded a contract
from the State of New York which management anticipates will generate revenues
of approximately $ 50,000,000 over three years ending December 31, 1999. Through
February 14, 1997 the Company has received orders aggregating approximately
$3,000,000 under the New York State agreement.
The Company currently has bids pending on approximately $ 12,140,000 in
projects. For the nine months ended March 31, 1997, the Company submitted bids
on approximately $ 31,800,000 in projects, of which $ 743,029 was awarded to the
Company. The Company continues to be under consideration for approximately
$12,140,000 of these projects.
Through its subsidiary, MarkCare Medical Systems, Inc. ("MarkCare"), the
Company continues to market its IntraScan II PACS and teleradiology systems and
is forming strategic alliances with other companies with related medical
products. Consistent with this marketing approach, the Company has entered into
a master supplier agreement with Data General Corporation, a large computer
hardware and systems integration provider with a client base of over 1,000
institutions, pursuant to which Data General will include the IntraScan II PACS
and teleradiology software applications in proposals to healthcare institutions.
Management anticipates that the sale of the IntraScan II systems will begin to
generate revenues in the calendar year ending December 31, 1997, although no
assurances can be given in this regard. If the IntraScan marketing plan is
successful, management believes that the revenues from resulting sales will be
more constant then those of the modular steel products presently and will reduce
fluctuations in the Company's results of operations and financial condition.
- 9 -
<PAGE>
Results of Operations
The substantial majority of the Company's operating revenues for the
reported periods were derived from the sale of its modular cells for
correctional institutions. Management believes that the sale of these modular
steel products will continue to represent the substantial majority of the
Company's operating revenues through September 30, 1997. For the nine months
ended March 31, 1997, sales of the modular steel products represented 94.7% of
total revenues.
Revenues from sales for the nine months ended March 31, 1997 increased 2.2%
to $ 3,276,578 from $ 3,206,371 for the comparable 1996 period. These stagnant
sales are attributable to the continued sporadic sales of its modular steel cell
products as discussed in "General".
Cost of sales for the nine months ended March 31, 1997, which consists
primarily of materials, labor, supplies, and fixed factory overhead expense,
decreased 27.1% to $ 2,665,643 from $ 3,656,949 for the comparable 1996. Cost of
sales as a percentage of revenues was 81.4% for the nine months ended March 31,
1997 as compared to 114.0% for the comparable 1996 period. Despite losses
incurred in connection with the outsourcing of projects for the three months
ended September 30, 1996 and factory start up costs incurred in the quarter
ended December 31, 1996, the Company reduced its cost of sales as a percentage
of revenues for the modular cell products from 114.0% for the period ended March
31, 1996 to 82.4% for the period ended March 31, 1997 through improved gross
profit margins and operating efficiencies. For the nine months ended March 31,
1997 fixed factory overhead expenses were $ 114,767 as compared to $ 154,090 for
the comparable 1996 period due to savings associated with the decision not to
maintain a factory for the three months ended September 30, 1996. Additionally,
the Company's MarkCare product line has lower costs of sales (49.8% as a
percentage of revenues) as compared to the modular cell product line. Management
believes that the substantial majority of the revenues of the MarkCare line will
be attributable to software sales and support services, which have virtually no
costs of sales.
Selling, general and administrative expenses for the nine months ended
March 31, 1997 increased 3.2% to $ 2,899,160 from $ 2,807,949 for the comparable
1996 period. This stabilization is attributable to a reductions in office staff,
trade show expenses, professional fees and the elimination of amortization
expenses related to the IntraScan I acquisition, partially offset by the
inclusion of $ 631,564 of selling, general and administrative expenses of Simis
Medical Imaging, Ltd. which was acquired in May 1996.
Liquidity and Capital Resources
The Company's working capital requirements result principally from staff
and management overhead, office expense and marketing efforts. The Company's
working capital requirements have historically exceeded its working capital from
operations due to the sporadic sales of its products. Accordingly, the Company
has been dependent and, absent significant improvements in operations, will
continue to be dependent on the infusion of new capital in the form of equity or
debt financing to meet its working capital deficiencies, although no assurance
can be given that such financing will be available. The Company believes its
present available working capital is sufficient to meet its operating
requirements through July 31, 1997. On March 10, 1997, the Company obtained a
$400,000 revolving line of credit collateralized by substantially all of the
Company's assets. To the extent it requires additional capital, the Company will
continue to principally look to private sources.
On August 23, 1996, the Company sold $ 2,200,000 principal amount 7%
convertible debentures due August 22, 1998 (the "1996 Debentures"). The 1996
Debentures, as amended, are convertible into shares of Common Stock at a
conversion price which is the lesser of (i) $ 1.38 or (ii) 80% of the average
closing bid price on the five trading days immediately preceding the date(s) of
conversion. Interest on the 1996 Debentures is payable in cash or Common Stock
at the Company's option.
- 10 -
<PAGE>
On January 21, 1997, the Company sold $ 750,000 principal amount 7%
convertible debentures due January 20, 1999 (the "1997 Debentures"). The 1997
Debentures are convertible, on or after July 15, 1997, into shares of Common
Stock at a conversion price which is the lesser of (i) $ 2.125 or (ii) 80% of
the average closing bid price on the five trading days immediately preceding the
date(s) of conversion. Interest on the 1997 Debentures is payable in cash or
Common Stock at the Company's option.
The Company presently has an effective registration statement relating
to 3,368,880 shares of Common Stock issuable upon the exercise of warrants and
options, the majority of which are at exercise prices ranging from $ 2.00 to
$5.00 per share. The Company will initially look to the exercise of presently
outstanding warrants and options to meet working capital deficits, however, if
sufficient securities are not exercised, the Company will be required to seek
additional private sales of its securities, which, if available, would most
likely be at discounts to the current trading price of the Company's Common
Stock.
The Company's inventory increased to $ 943,965 at March 31, 1997 from
$ 146,305 at June 30, 1996 as the Company increased purchases of raw materials
and components for projects in production.
Cash and cash equivalents decreased from $ 263,922 at June 30, 1996
to $ 37,924 at March 31, 1997 as certain accounts payable were satisfied. During
the six months ended March 31, 1997, cash and cash equivalents decreased
$1,517,955 as accounts receivable related to projects for which the Company
purchased raw materials and cell components remain outstanding. Working capital
increased to $ 1,362,231 at March 31, 1997 from $ 675,864 at June 30, 1996
primarily due to proceeds from the 1996 Debentures and 1997 Debentures
placements offset by operating expenses.
- 11 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On March 3, 1997 a verdict in favor of the Company was rendered in the
Supreme Court of New York State, Westchester County (JTF Management
Associates, Ltd. and Joel Fishman v. Mark Correctional Systems, Inc. and
Mark Lighting Index No. 93-22722). Plaintiffs alleged damages for
commissions in the sum of $ 10 million. The Company was not awarded any
damages on its counterclaim for fraud and misrepresentation.
Item 2. Changes in Securities.
(a) On August 23, 1996, the Company sold $ 2,200,000 principal amount 7%
convertible debentures due August 22, 1998 (the "1996 Debentures"). On December
26, 1996, the terms of the 1996 Debentures were amended to (i) prohibit
additional conversions until March 31, 1997 unless the trading price of the
common stock reaches levels in excess of $ 3.00 per share and (ii) modify the
conversion price to the lesser of (a) $ 1.38 or (b) 80% of the average closing
bid price on the five trading days immediately preceding the date(s) of
conversion. The outstanding principal amount of the debentures as of March 31,
1997 was $ 950,000.
(c) On January 21, 1997, the Company sold $ 750,000 principal amount 7%
convertible debentures due January 20, 1999 (the "1997 Debentures") to Frank
Brosens. The 1997 Debentures are convertible, on or after July 15, 1997, into
shares of common stock at a conversion price which is the lesser of (i) $ 2.125
or (ii) 80% of the average closing bid price on the five trading days
immediately preceding the date(s) of conversion. Interest on the Debentures is
payable in cash or common stock at the Company's option. The 1997 Debentures
were sold without registration in reliance of the exemption provided by Section
4(2) of the Securities Act of 1933 due to the sophistication of the investor and
the limited nature of the offering.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit Description
27.1 Financial Data Schedule
- 12 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
Date: May 14, 1997
MARK SOLUTIONS, INC.
By: /s/ Carl Coppola
Carl Coppola - President,
Chief Executive Officer
and Chief Financial Officer
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 37,924
<SECURITIES> 0
<RECEIVABLES> 2,299,139
<ALLOWANCES> 0
<INVENTORY> 943,965
<CURRENT-ASSETS> 3,410,014
<PP&E> 2,407,048
<DEPRECIATION> 2,047,565
<TOTAL-ASSETS> 4,839,033
<CURRENT-LIABILITIES> 2,047,783
<BONDS> 0
0
0
<COMMON> 144,850
<OTHER-SE> 907,057
<TOTAL-LIABILITY-AND-EQUITY> 4,839,033
<SALES> 3,276,578
<TOTAL-REVENUES> 3,276,578
<CGS> 2,665,643
<TOTAL-COSTS> 5,564,803
<OTHER-EXPENSES> 3,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 707,456
<INCOME-PRETAX> (2,998,801)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,998,801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,998,801)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
