UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File Number: 0-17204
INFINITY, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 84-1070066
- - ------------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
211 West 14th Street, Chanute, Kansas 66720
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(Address of principal executive offices including zip code)
(316) 431-6200
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(Issuer's telephone number)
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 June 30, 1996, 8,731,395 shares of common stock, $.001 par value per
share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
INFINITY, INC.
FORM 10-QSB
INDEX
Page
PART I: FINANCIAL INFORMATION Number
Item 1. Financial Information:
Condensed Consolidated Balance Sheets................ 3
Condensed Consolidated Statements of Operations...... 4
Condensed Consolidated Statements of Cash Flows...... 5
Notes to Financial Statements........................ 6
Item 2. Management's Discussion and Analysis
or Plan of Operations................................ 9
PART II: OTHER INFORMATION.................................... 12
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, March 31,
1996 1996 (Note)
ASSETS
CURRENT ASSETS
Cash $ 93,980 $ 183,402
Accounts receivable, less allowance
for doubtful accounts 425,124 466,128
Inventories 205,517 208,979
Prepaid expenses 16,675 23,885
TOTAL CURRENT ASSETS $ 741,206 $ 882,394
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation 4,511,209 4,633,976
OIL AND GAS PROPERTIES NOT SUBJECT TO
AMORTIZATION using the full cost method 896,977 662,730
INTANGIBLE ASSETS, at cost, less
accumulated amortization 259,068 271,082
$ 6,408,460 $ 6,450,182
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 580,383 $ 514,164
Accrued expenses 323,527 342,296
Current portion of deferred revenue 60,000 60,000
Notes payable 80,000 -
Current portion of long-term debt 287,913 287,913
TOTAL CURRENT LIABILITIES $ 1,331,823 $ 1,204,373
LONG-TERM LIABILITIES
Long-term debt, less current portion above $ 2,183,606 $ 2,262,058
Note payable, related party 309,968 309,968
Deferred revenue, less current portion above 190,017 206,208
TOTAL LIABILITIES $ 4,015,414 $ 3,982,607
STOCKHOLDERS' EQUITY
CAPITAL CONTRIBUTED
Common stock, par value $.0001, authorized
300,000,000 shares, issued and outstanding
8,731,395 shares; 8,731,395 shares $ 873 $ 873
Additional paid-in capital 7,115,468 7,115,468
TOTAL CAPITAL CONTRIBUTED $ 7,116,341 $ 7,116,341
RETAINED EARNINGS(DEFICIT) $(4,723,295) $(4,648,766)
TOTAL STOCKHOLDERS' EQUITY $ 2,393,046 $ 2,467,575
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,408,460 $ 6,450,182
The consolidated balance sheet at March 31, 1996 has been derived from the
audited financial statements at that date.
See Notes to Financial Statements.
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Quarters Ended June 30, 1996 and 1995
Three Months Ended June 30,
1996 Restated 1995
NET SALES $ 1,260,036 $ 994,940
COST OF GOODS SOLD 650,916 774,643
GROSS PROFIT 609,120 220,297
OPERATING EXPENSES
Salaries 160,999 215,966
Taxes 53,726 88,634
Consulting fees 11,902 22,692
Professional services 27,136 50,750
Research & development 1,967 18,970
Travel & entertainment 9,510 25,734
Insurance 69,781 64,108
Advertising 671 3,002
Office supplies and expense 16,727 20,770
Telephone 24,723 29,875
Rent & utilities 36,667 43,939
Depreciation & amortization 166,730 168,648
Other expenses 33,122 12,320
TOTAL OPERATING EXPENSES $ 613,661 $ 765,408
OPERATING INCOME (LOSS) (4,541) (545,111)
OTHER INCOME (EXPENSE)
Interest income & finance charges 519 2,655
Interest expense (70,507) (54,717)
Gain (Loss) on sales of assets - -
TOTAL OTHER INCOME (EXPENSE) $ (69,988) $ (52,062)
NET INCOME (LOSS) $ (74,529) $ (597,173)
NET LOSS PER COMMON SHARE $ (0.01) $ (0.07)
See Notes to Financial Statements.
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Quarters Ended June 30, 1996 and 1995
Three Months Ended June 30,
1996 Restated 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (74,529) $ (597,173)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 166,730 168,648
Gain (Loss) on Sale of Asset - -
Stock Issued for Services
(Increase) decrease in operating assets
Accounts receivable 41,004 (131,260)
Inventories 3,462 (16,995)
Prepaid expenses 7,210 23,938
Increase (decrease) in operating liabilities
Accounts payable 66,219 163,204
Accrued expenses (18,769) (109,082)
Deferred revenue (16,191) (9,649)
NET CASH USED IN OPERATING ACTIVITIES 175,136 (508,369)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchasing of property and equipment (62,309) (101,147)
Proceeds of equipment sold - 7,500
Investment in Oil and Gas Properties (197,542) -
Investment in intangible assets (6,345) 0
NET CASH USED IN INVESTING ACTIVITIES (266,196) (93,647)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable - (28,632)
Increase in notes payable 80,000 -
Increase in long-term debt - 2,500,000
Proceeds from issuance of common stock - 27,200
Repayment of long-term debt (78,452) (1,503,056)
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,548 995,512
NET INCREASE (DECREASE) IN CASH (89,512) 393,469
CASH, BEGINNING OF PERIOD 183,420 230,283
CASH, END OF PERIOD $ 93,890 $ 623,779
See Notes to Financial Statements.
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Infinity, Inc. (Infinity) was organized under the laws of the
State of Colorado on April 2, 1987, primarily for the purpose of engaging in
any lawful business, but intending to acquire business opportunities.
Principles of consolidation - The accompanying consolidated financial
statements include the accounts of the following companies:
PARENT COMPANY
Infinity, Inc.
WHOLLY-OWNED SUBSIDIARIES
Infinity Research and Development, Inc.
Consolidated Industrial Services, Inc.
(incorporated during the year ended March 31, 1994)
L.D.C. Food Systems, Inc.
(acquired during the year ended March 31, 1994)
CIS Oil and Gas, Inc.
(incorporated during the year ended March 31, 1996)
Consolidated Industrial Waste Treatment Services, Inc.
(incorporated during the year ended March 31, 1996)
OTHER SUBSIDIARIES
Infinity Oil and Gas, Inc.
(incorporated during the year ended March 31, 1996)
(2) EARNING (LOSS) PER SHARE
Loss per share is based on the weighted average number of shares outstanding.
The number of shares used in the calculation was 8,731,395, and 7,789,080 for
the periods ended June 30, 1996 and 1995, respectively. Common stock
equivalents are not included in the computation because their inclusion would
be anti-dilutive.
On November 30, 1993, the Company executed a 1 for 12 reverse stock split.
All share and per share amounts have been adjusted to reflect the reverse
split.
(3) ACQUISITIONS
On December 15, 1993, Infinity, Inc. acquired all of the outstanding stock of
L.D.C. Food Systems, Inc., a New Jersey corporation, in exchange for the
issuance of 74,405 shares of Infinity, Inc.'s common stock. This transaction
has been accounted for as a pooling-of-interests, and accordingly, prior
period financial statements have been restated as if the entities had been
combined since inception. Since both companies were development stage
enterprises prior to the acquisition, neither company had recorded revenues
prior to December 1993.
In January 1994, the Company's wholly-owned subsidiary, Consolidated
Industrial Services, Inc., purchased substantially all of the assets,
operating rights and liabilities of Consolidated Oil Well Services, Inc. The
consolidated statements of operations include the results of operations
related to this acquisition for the period subsequent to January 1, 1994.
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(4) SHORT-TERM BORROWINGS
At June 30, 1996, the Company's subsidiary, Consolidated Industrial Services,
Inc. (CIS), had a $100,000 line of credit available which expires September
1996. The line of credit is collateralized by certain equipment with interest
at 2% above the lender's corporate base rate. As of June 30, 1996, CIS had
$80,000 drawn on the line of credit.
(5) LONG-TERM DEBT
On May 31, 1995, the Company obtained $2,500,000 in long-term financing from
Seymour, Inc. (Seymour) collateralized by substantially all of the tangible
property and equipment of its wholly owned subsidiary, Consolidated Industrial
Services, Inc. The note required monthly payments of interest at 10% for a
period of six months beginning July 1995. Thereafter, monthly payments of
principal and interest in the amount of $41,503 are due until maturity, June
1998. The agreement also contains certain restrictive covenants with respect
to dividends, acquisitions and capital expenditures. Proceeds from the note
were used to refinance $1,500,000 in short-term borrowings and provide
additional working capital for the Company.
In connection with the agreement, the Company issued a warrant to Seymour to
purchase up to 1,250,000 shares of the Company's common stock at an exercise
price of $2.00 per share. The warrant expires 90 days after the payment of
all principal and interest due on the Seymour note.
During September 1995, the Company agreed to pay to the Federal Highway
Administration $72,500 in twenty four monthly installments of $3,116.14 to
settle a fine originally assessed by the Department of Transportation in the
amount of $233,100.
(6) COMMON STOCK AND STOCK OPTIONS
On April 24, 1995, the Company's Board of Directors authorized the issuance of
202,000 additional shares of the Company's common stock to various individuals
as compensation for services previously performed for the Company. The shares
were valued at $1.91 per share. The issuance of common stock satisfied a
liability of $390,000 included in accrued consulting expenses at March 31,
1995. The Board also granted stock options to various individuals to purchase
up to 900,000 shares of the Company's common stock at $2.00 per share. The
options expire 5 years from the date of grant. Included among the individuals
receiving common stock and stock options were two shareholders who each became
beneficial owners of approximately 6% of the Company's common stock.
In April 1996, the Company granted stock options to a financial advisor to
purchase up to 100,000 shares of stock at prices ranging form $1.75 to $2.25
per share.
In February 1996, the Company sold 766,667 shares of common stock in a
secondary offering. In conjunction with this offering, the Company issued
warrants which allow purchases of up to 766,667 additional shares of common
stock at $.60 per share. These warrants expire five years from the date of
grant.
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<PAGE>
INFINITY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENT (UNAUDITED)
(7) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.
(8) FINANCIAL STATEMENT
In connection with the Consolidated Oil Well Services, Inc. (COWS)
acquisition, the Company issued two notes totaling $2,000,000. The Company
repaid one note with a principal amount of $600,000 during the year ended
March 31, 1994. The principal amount of the second note, $1,400,000, together
with accrued interest, was originally due September 1994. The maturity date
was extended to December 1994, at which time the holder of the note agreed to
accept a payment of $750,000 and $100,000 in additional oil well service
credit in full satisfaction of the note and related accrued interest.
As a result of the note reduction, the original purchase price of the COWS
assets was decreased by $538,910 and the consolidated financial statements for
the year ended March 31, 1994 were retroactively restated to reflect this
adjustment. The effect of the adjustment, net of deferred income taxes, was
to decrease the total assets by $525,437, decrease total liabilities by
$549,688 and to increase stockholders' equity by $24,251. After further
review, the company determined that this note reduction should have been
recorded as a gain from refinancing. Accordingly, the consolidated financial
statements for the year ended March 31, 1995 were retroactively restated to
reflect this adjustment. The effect of this adjustment at March 31, 1995, net
of deferred income taxes, was to increase total assets and increase total
stockholders' equity by $471,546. The following table reconciles quarterly
prior year information, as previously reported, with information subsequent to
the adjustment for the gain on refinancing for the three month period ended
June 30, 1995.
Net (loss), as previously reported $ (584,000)
Adjustment to depreciation expense (13,473)
Net (loss), as restated $ (597,473)
Net (loss) per share, as previously reported $ (.07)
Adjustment to depreciation expense $ (.01)
Net (loss) per share, as restated $ (.08)
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company was organized as a Colorado corporation on April 2, 1987, for
the purpose of searching for and acquiring a business combination candidate.
On March 10, 1992, the Company acquired Infinity Research & Development, Inc.,
then named Phoenix Research & Development Corporation ("PRD"). This
acquisition was accounted for as a reverse acquisition.
On December 15, 1993, Infinity, Inc. acquired all of the outstanding
stock of L.D.C. Food Systems, Inc., a New Jersey Corporation, in exchange for
the issuance of 74,405 shares of Infinity, Inc.'s common stock. This
transaction has been accounted for as a pooling-of-interests, and accordingly,
prior period financial statements have been restated as if the entities had
been combined since inception. Since both companies were development stage
enterprises prior to the acquisition, neither company had recorded revenues
prior to December 1993.
In January 1994, the Company's wholly-owned subsidiary, Consolidated
Industrial Services, Inc., purchased substantially all of the assets,
operating rights and certain liabilities of Consolidated Oil Well Services,
Inc. The consolidated statements of operations include the results of
operations related to this acquisition for the period subsequent to January 1,
1994.
In September, 1995, the Company's newly formed subsidiary, Infinity Oil
and Gas, Inc. began seeking joint interest partners and prospective properties
to expand the Company's activities to include exploration, development and
operation of gas producing properties.
In December, 1995, a newly formed wholly-owned subsidiary, CIS Oil and
Gas, Inc., entered into an agreement to develop and operate a coal methane gas
producing property in southeastern Colorado. Significant development activity
has occurred and revenues are expected from gas sales prior to December 31,
1996.
In January, 1996, the Company formed a wholly-owned subsidiary,
Consolidated Industrial Waste Treatment Services, Inc. The Company's non-
hazardous industrial waste water treating and disposal activities will be
transformed to this subsidiary when all permits have been transformed.
RESULTS OF OPERATIONS
The oil field services segment of the Company generated $1,154,767 in
revenues and $593,999 in cost of sales during the three months ended June 30,
1996, compared to $837,581 in revenues and $493,165 in cost of sales for the
three months ended June 30, 1995. The operating expenses incurred by the oil
field services segment of the Company were $371,380 for the three months ended
June 30, 1996 and $423,346 for the three months ended June 30, 1995. Net
operating income for this segment improved to a profit of $189,388 for the
three months ended June 30, 1996 from a loss of ($78,930) for the three months
ended June 30, 1995. The improved results are attributed to the Company being
able to obtain an increase in sales while taking measures to reduce certain
costs. Depreciation and amortization expense included in operating expenses
for the oil field services division was $122,641 for the three months ended
June 30, 1996 and $127,305 for the three months ended June 30, 1995.
The environmental services segment of the Company which includes all
water treatment activities, generated $105,269 in revenues and $55,706 in cost
of sales during the three months ended June 30, 1996, compared to $157,359 in
revenues and $281,478 in cost of sales for the three months ended June 30,
1995. Operating expenses incurred by the environmental services division were
$90,733 for the three months ended June 30, 1996, and $227,015 for the three
months ended June
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<PAGE>
30, 1995, including depreciation and amortization expense of $41,067 for the
three months ended June 30, 1996 and $39,536 for the three months ended June
30, 1995. The substantial decreases in cost of sales and operating expenses
were the result of a reduction in research and development activities and
changes in the operation of the wastewater treatment plant in Cheyenne,
Wyoming. Net operating income for this segment improved to an operating loss
of ($41,170) for the three months ended June 30, 1996 from an operating loss
of ($348,518) for the three months ended June 30, 1995. At the end of the
three months ended June 30, 1996, this business segment was being operated on
approximately a break-even basis.
The oil and gas production segment of the Company incurred expenses of
$44,931 during the three months ended June 30, 1996, and had no corresponding
expenses in the three months ended June 30, 1995.
Expenses incurred in corporate activities were $107,828 for the three
months ended June 30, 1996 and $117,664 for the three months ended June 30,
1995. This reduction was substantially achieved in the area of consulting
fees and professional services.
Other expenses increased primarily because of interest expense on long-
term debt of $70,507 for the three months ended June 30, 1996 compared to
$54,717 for the three months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had a working capital deficit of
$590,617 compared to a working capital deficit of $321,979 at March 31, 1996.
The decrease in working capital is primarily due to the use of working capital
to develop gas properties in southeastern Colorado.
The Company presently has outstanding warrants to purchase shares of
Common Stock which, if all were to be exercised, could result in gross
proceeds of approximately $2,465,616. The Company intends to file an
amendment to the registration statement relating to the warrants during the
next six months, however, there is no assurance that the Company will be
successful in obtaining the exercise of any of the warrants.
In addition, the Company also issued warrants in conjunction with the
long-term financing on May 31, 1995 which, if exercised, would result in gross
proceeds of $2,500,000. These warrants can be exercised any time prior to
August 31, 1998.
During the three month period ended June 30, 1996 cash generated by
operating activities was $175,136 compared to cash used of ($508,369) for the
three months ended June 30, 1995. The improvement in the amount of cash
generated was due to reduction of research and development activities and
improvement of the oil field services and water treatment activities. In
addition, an increase of $66,221 in accounts payable and a decrease of $41,004
in accounts receivable contributed to this improvement.
Net cash provided by operation of the oil field services segment was
$312,029. Net cash used by the operation of the environmental services
segment was ($103). Net cash used by the operation of the oil and gas segment
was ($44,931). Net cash used by the operation of corporate activities was
($104,806) plus $69,988 of net interest expense.
Cash flows from investing activities during the three months ended June
30, 1996, were ($261,196) compared to ($93,647) for the comparable period of
1995. The increase is primarily due to the investment to develop gas
production properties of ($197,542).
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<PAGE>
The Company drew $80,000 on a bank line of credit during the three months
ended June 30, 1996. This cash received from financing activities was reduced
by the repayment of ($78,457) of long term debt. On May 31, 1995, the Company
obtained $2,500,000 in long-term financing from Seymour, Inc. (Seymour)
collateralized by substantially all of the tangible property and equipment of
its wholly owned subsidiary, Consolidated Industrial Services, Inc. The note
required monthly payments of interest at 10% for a period of six months
beginning July 1995. Thereafter, monthly payments of principal and interest
in the amount of $41,503 are due until maturity, June 1998. The agreement
also contains certain restrictive covenants with respect to dividends,
acquisitions and capital expenditures. Proceeds from the note were used to
refinance $1,500,000 in short-term borrowings and provide additional working
capital for the Company.
Seymour, Inc. also holds a warrant which allows it to purchase up to
1,250,000 shares of the Company's common stock at a price of $2.00 per share.
This warrant is exercisable until ninety days after the promissory note is
fully paid.
The Company does not have any material commitments for capital
expenditures as of the filing of this Report. However, the Company is
required to drill a number of gas wells in its Raton Basin property in order
to retain its rights to further develop this leased property.
The Company intends to drill an additional five gas wells in southeastern
Colorado prior to December 31, 1996, and at least ten additional wells during
each of the next four years. This pace of development will meet lease
requirements to allow the Company to continue to develop the property.
Financing for this future development will be necessary and is expected to be
obtained by borrowing based on the production and reserves of the existing
wells or by preselling the gas produced by these wells. However, there is no
assurance that the Company will be successful in obtaining such financing.
In addition, a gathering system must be installed to transport gas
produced by the wells to the main pipeline. The Company intends to contract
with an outside party who specializes in this aspect of the transportation
business to construct and operate this gathering system. The outside party
will be paid for its construction and operating efforts based on the volume of
gas produced.
Management anticipates that the agreement for the gathering system should
be concurrent with the agreement for financing future development of the
field.
During the third and fourth quarters of the year ended March 31, 1996,
and continuing in subsequent months, the Company has made significant
reductions in operating expenses through reductions in personnel and
facilities. Expenses for research and development activities in the water
treatment areas have been contractually transferred to others under licensing
agreements or reduced to only activities necessary for the Company's water
treatment service operations. Corporate and sales activities have been
consolidated to the operating facility in Chanute, Kansas, eliminating the
office in Lenexa, Kansas.
Operations of the Company have generated adequate cash flow to service
continuing operations during the fourth quarter of the year ended March 31,
1996, and the three months ended June 30, 1996. Management believes that this
level is suitable and adequate to service continuing operations and
obligations. Additional gas wells will be drilled and completed only when
additional financing is obtained specifically for that purpose. In addition,
subsequent to year end the Company obtained a commitment for a financing
facility based on accounts receivable which will advance to the Company up to
80% of qualified receivable balances. No advances have been made under this
arrangement at this time.
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<PAGE>
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. None.
(b) REPORTS ON FORM 8-K. None.
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.
INFINITY, INC.
By /s/ Stanton E. Ross
Stanton E. Ross, President
Date: August 8, 1996
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<PAGE>
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- - ------- -----------------------------
27. FINANCIAL DATA SCHEDULE Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 3 and 4 of the Company's Form 10-QSB for the year to date, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 93,980
<SECURITIES> 0
<RECEIVABLES> 425,124
<ALLOWANCES> 0
<INVENTORY> 205,517
<CURRENT-ASSETS> 741,206
<PP&E> 4,511,209
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,408,460
<CURRENT-LIABILITIES> 1,331,823
<BONDS> 0
<COMMON> 873
0
0
<OTHER-SE> 2,392,173
<TOTAL-LIABILITY-AND-EQUITY> 6,408,460
<SALES> 1,260,036
<TOTAL-REVENUES> 1,260,036
<CGS> 650,916
<TOTAL-COSTS> 650,916
<OTHER-EXPENSES> 613,661
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (70,507)
<INCOME-PRETAX> (74,529)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,529)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
