UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTlON 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______ to_____
Commission File Number 33-18582
ITRONICS INC.
- -----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
TEXAS 75-2198369
------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
6490 S. McCarran Blvd., Bldg C-23, Reno, Nevada 89509
- -----------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (702)689-7696
-------------
NO CHANGE
- -----------------------------------------------------------------------------
Former name, former address and former fiscal, if changes since last report.
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements during the
past 90 days. Yes (x) No ( ).
1
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of October 31, 1997, 37,157,774 shares of common stock were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X)
2
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - September 30, 1997
and December 31, 1996 4
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1997 and 1996. 6
Condensed Consolidated Statements of Cash Flows for the
Nine months Ended September 30, 1997 and 1996. 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of
Operation 9
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 3. Defaults Upon Senior Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
3
<PAGE>
PART I - FINANCIAL INFORMATIONON
Item 1. Financial Statements
- ----------------------------
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
Sept. 30, 1997 Dec. 31, 1996
-------------- -------------
CURRENT ASSETS
Cash $ 35,297 $ 1,091
Accounts receivable 88,533 60,626
Note receivable, stockholder 70,521 -
Inventories 32,843 28,003
Prepaid expenses 10,212 19,869
--------- ---------
Total Current Assets 237,406 109,589
--------- ---------
PROPERTY AND EQUIPMENT
Leasehold improvements 14,212 14,212
Equipment 233,476 219,214
Vehicles 32,858 32,858
Equipment under capital lease 79,690 79,690
--------- ---------
360,236 345,974
Less: Accumulated depreciation and amortization 240,110 221,730
--------- ---------
120,126 124,244
--------- ---------
OTHER ASSETS
Intangibles 8,102 9,002
Note receivable, stockholder - -
Deposits 2,823 1,993
--------- ---------
10,925 10,995
--------- ---------
$ 368,457 $ 244,828
========= =========
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS'(DEFICIT)
Sept. 30, 1997 Dec. 31, 1996
-------------- -------------
CURRENT LIABILITIES
Accounts payable $ 111,984 $ 121,200
Accrued expenses 178,441 157,839
Contracts payable 7,666 18,205
Current maturities of long-term debt 5,500 31,115
Due to stockholders 77,900 69,609
Capital lease obligations due stockholders 44,500 37,136
Interest payable 33,800 33,374
Other 6,330 6,326
--------- ---------
Total Current Liabilities 466,121 474,804
--------- ---------
LONG-TERM LIABILITIES
Due to stockholders, less current maturities 132,408 117,057
Accrued salary due officer/stockholder 250,000 250,000
Capital lease obligations due stockholders, less
current maturities 4,766 13,204
Deferred gain, less current maturities 20,506 23,143
--------- ---------
Total Long-Term Liabilities 407,680 403,404
--------- ---------
873,801 878,208
--------- ---------
Series "A" cumulative convertible redeemable
preferred non-voting shares 217,151 596,868
--------- ---------
STOCKHOLDERS' (DEFICIT)
Preferred stock (81 shares outstanding) - -
Common stock ( 32,606,821 shares outstanding at
September 30, 1997 and 29,748,046 outstanding at
December 31, 1996) 32,607 29,748
Additional paid-in capital 2,015,431 1,444,913
Accumulated deficit (3,158,046) (2,819,500)
Common stock to be issued 387,513 114,591
--------- ---------
( 722,495) (1,230,248)
--------- ---------
$ 368,457 $ 244,828
========= =========
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,1997 AND 1996
(UNAUDITED)
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
REVENUES
Mining technical services $ 205,341 $ 235,457 $ 381,456 $ 488,778
Photobyproduct recycling 36,801 33,235 91,273 163,959
Silver 31,100 38,445 80,163 83,607
Fertilizer 3,927 8 6,417 12,707
-------- -------- -------- --------
Total Revenues 277,169 307,145 559,309 749,051
COST OF SALES 260,284 269,381 565,806 643,781
-------- -------- -------- --------
Gross Profit 16,885 37,764 ( 6,497) 105,270
-------- -------- -------- --------
OPERATING EXPENSES
Depreciation and amort. 5,681 5,370 16,643 16,375
Research and development 14,700 8,048 41,741 27,377
Sales and marketing 22,757 13,872 58,628 42,385
General and administration 79,027 50,241 175,469 155,312
-------- -------- -------- --------
122,165 77,531 292,481 241,449
-------- -------- -------- --------
Operating Income (Loss) (105,280) (39,767) (298,978) (136,179)
-------- -------- -------- --------
OTHER INCOME (EXPENSE)
Forgiveness of debt 12,824 - 12,824 33,000
Interest expense (20,465) (10,774) (54,102) (30,554)
Other, net 1,115 - 1,709 -
-------- -------- -------- --------
Total Other Income
(Expense) ( 6,526) (10,774) ( 39,569) 2,446
-------- -------- -------- --------
Income (Loss) before provision
for income taxes (111,806) (50,541) (338,547) (133,733)
Provision for income taxes - - - -
-------- -------- -------- --------
Net Income (Loss) $(111,806) $ (50,541) $(338,547) $(133,733)
======== ======== ======== ========
Weighted average number of
shares outstanding (1,000's) 32,476 29,674 31,000 29,236
======== ======== ======== ========
Earnings (Loss)
per share $( 0.0036) $( 0.0020) $( 0.0118) $( 0.0056)
======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements
6
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1997 AND 1996
(UNAUDITED)
Nine Months Ended Sept. 30,
1997 1996
---------- ----------
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income (1oss) $(338,547) $(133,733)
Adjustments to reconcile net income (loss)
to cash used by operations
Depreciation and amortization 16,643 16,375
Forgiveness of debt (12,824) (33,000)
Expenses paid with stock/notes 58,606 13,014
(Increase) decrease:
Trade receivables (27,907) 11,055
Inventories ( 4,840) (10,833)
Prepaids and other assets 8,827 6,761
Increase (decrease):
Accounts payable ( 8,214) 1,884
Accrued expenses 45,703 21,755
Accrued interest 15,424 14,905
-------- --------
Net Cash Used by Operating Activities (247,129) (91,817)
-------- --------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Acquisition of property and equipment
and intangibles (14,262) (33,527)
-------- --------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Proceeds from sale of common stock 283,029 110,000
Proceeds from debt, stockholders 96,500 31,770
Payments on debt (83,932) (54,318)
-------- --------
Net Cash Provided by Financing Activities 295,597 87,452
-------- --------
Net Increase (Decrease) in Cash 34,206 (37,892)
Cash, beginning of period 1,091 43,411
-------- --------
Cash, end of period $ 35,297 $ 5,519
======== ========
See Notes to Condensed Consolidated Financial Statements
7
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. The unaudited condensed consolidated financial statements printed
herein have been prepared in accordance with the instructions to Form 10-QSB
and do not include all of the information and disclosures required by
generally accepted accounting principles. Therefore, these financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes included in the Company's Form 1O-KSB for
the year ended December 31, 1996. These financial statements reflect all
adjustments that are, in the opinion of management, necessary to fairly
state the results for the interim periods reported.
2. The results of operations for the three and nine months ended
September 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
3. Subsequent to September 30, 1997, several significant transactions
have occurred, including the following:
a. Approximately $159,000 in accrued salary due executive
officers has been converted into the Company's restricted common
stock.
b. The remaining outstanding preferred shares have been converted
into the Company's restricted common stock. Therefore, the
redemption amount of $217,151 at September 30, 1997 will be added
to paid-in capital during the fourth quarter of 1997.
c. Lease payments and accrued interest due stockholders, totaling
$25,000, have been converted into the Company's restricted common
stock. The conversion fully completes the terms of the lease.
d. Promissory notes and accrued interest due stockholders,
totaling $38,300, have been converted to the Company's restricted
common stock.
e. Commitments for the remainder of the funds needed to complete
the $500,000 private placement have been received.
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
I. Results of Operations
The Company reported a net loss of $111,806 or $(0.0036) per share for
the quarter ended September 30, 1997, compared to a net loss of $50,541 or
$(0.0020) per share for the comparable 1996 period. For the first nine months
of 1997, the net loss was $338,547 or $(0.0118) per share, compared to a net
loss of $133,733 or $(0.0056) per share for the comparable 1996 period.
Several factors contributed to the decline in earnings for the third quarter
of 1997. First, sales declined approximately $30,000 while cost of sales
declined by approximately $9,000, resulting in reduced gross profit of
$21,000. Second, R&D and sales/marketing expenses increased a combined
$15,500. The increased expenses reflect the ongoing costs of discussions with
Western Farm Service, Inc. regarding fertilizer nutritional programs and
distribution and the corporate marketing effort designed to inform potential
investors and the general public about the Company and its products and
services. Third, general and administration expenses increased by
approximately $29,000. Of this increase, $23,000 is due to audit fees and to
legal fees related to the private placement. In 1996, the audit fees were
incurred during the second quarter. The remainder of the increase is
attributable to an additional part-time management position.
To provide a more complete understanding of the factors contributing
to the changes in sales, operating expenses and the resultant operating loss,
the discussion presented below is separated into the Company's two operating
segments.
MINING TECHNICAL SERVICES
This segment, known as Whitney & Whitney, Inc., provides mining and
materials management, geology, engineering and economics consulting, and
publishes specialized mineral economics and materials financial reports.
It employs technical specialists with expertise in the areas of mining,
geology, mining engineering, mineral economics, materials processing and
technology development. Technical services have been provided to many of the
leading U.S. and foreign mining companies, several public utilities with
mineral interests, to various state agencies, the U.S. and foreign
governments, and the United Nations and the World Bank.
- ------------------------------------------------------------------------------
Three Months Ended Sept 30, Nine Months Ended Sept 30,
---------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
Sales revenue $205,341 $235,457 $381,456 $488,778
Operating income (loss) $( 4,980) $ 32,892 $(23,120) $ 75,381
- ------------------------------------------------------------------------------
Mining technical services revenue was approximately $205,300 for the
quarter ended September 30, 1997, compared to $235,500 for the comparable
quarter of 1996, a 12.8% decrease. Of this decrease, $22,200 was due to a
reduction in pass-through revenues/costs. In the prior year quarter, pass-
through costs were incurred on a mineral property being managed by Whitney &
9
<PAGE>
Whitney, Inc. The property was successfully leased to another party in early
1997. Consequently, no similar pass-through costs were incurred during the
current quarter. Cost of sales was reduced by $9,200 due to the $22,200
reduction in pass-through costs previously discussed, which was partially
offset by an increase in payroll, consulting and related costs of $11,600 due
to increased utilization of outside technical specialists needed to generate
the technical services revenue. These factors resulted in a gross profit for
the segment of $42,500 for the third quarter of 1997, compared to $63,500 for
the prior year third quarter, a decline of 33.0%.
Segment operating expenses increased by $17,000 due to the audit,
legal, marketing, and management costs discussed above.
The combination of these factors resulted in a 1997 third quarter
segment operating loss of $5,000, compared to operating income of $32,900 for
the comparable 1996 quarter.
For the first nine months of 1997, segment revenue totaled approx-
imately $381,500, compared to $488,800 for the first nine months of 1996, a
decline of 22.0%. Operating loss for the period was $23,100, compared to
operating income of $75,400 for the comparable 1996 period, a decrease of
$98,500. The primary factor contributing to the decline was decreased
consulting activity. Management focus on fertilizer marketing discussions
has contributed to the decreased consulting business. In addition, one of
the segment's primary technical service projects has been winding down and
is now substantially complete.
PHOTOBYPRODUCT FERTILIZER
This segment, known as Itronics Metallurgical, Inc., operates a semi-
works photobyproduct recycling plant, which includes related silver recovery.
As part of the recycling process, the Company is manufacturing and testing a
liquid turf fertilizer. Revenues are generated from photobyproduct management
services, silver sales and fertilizer sales.
- ------------------------------------------------------------------------------
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Sales revenue $ 71,828 $ 71,688 $ 177,853 $ 260,273
Operating income (loss) $(100,300) $(72,659) $(278,858) $(211,560)
- ------------------------------------------------------------------------------
Total segment sales for the third quarter of 1997 were approximately
$71,800, a nominal increase from the second quarter of 1996. Photobyproduct
recycling revenue for the quarter increased by $3,600 compared to the third
quarter of 1996, as a result of an 8.3% increase in volume. Silver sales
decreased $7,300 from the third quarter of 1996. Silver ounces sold decreased
8.4% for the quarter. Fertilizer sales for the quarter were approximately
$3,900, compared to nominal sales for the 1996 third quarter. The current
quarter sales include test marketing orders of Gold'n Gro Iron and Gold'n Gro
20-1-7 placed by Western Farm Service, Inc. (WFS). The progress of discussions
with WFS are described under "New Developments" on page 12 of this report.
Cost of sales for the third quarter of 1997 increased nominally over the
10
<PAGE>
third quarter of 1996. These factors resulted in a gross loss of $25,700 for
the third quarter of 1997, nearly identical to the gross loss for the third
quarter of 1996.
Segment operating expenses increased approximately $27,700 over the
third quarter of 1996, due to the fertilizer R&D and marketing, corporate
marketing, audit, legal, and management expenses discussed above.
These factors resulted in a 1997 third quarter segment operating loss
of $100,300, compared to a loss of $72,700 for the third quarter of 1996, an
increased loss of $27,600, or 38.0%.
For the first nine months of 1997, segment sales totaled approximately
$177,900, compared to $260,300 for the first nine months of 1996, a decrease
of 31.7%. Operating loss for the first nine months of 1997 was approximately
$275,900, compared to $211,600 for the first nine months of 1996, an increased
loss of 30.4%. The primary factors contributing to the decline were the prior
year first quarter sale of a distillation and rinse water recycling system,
lower profitability on silver sales due to the reduced average sales price,
and increased R&D, sales and marketing expenses due to fertilizer development
and corporate marketing efforts.
SUMMARY
On a consolidated basis, the various changes in revenues and operating
expenses resulted in a third quarter 1997 operating loss of $105,300, compared
to an operating loss of $39,800 for the third quarter of 1996, an increased
loss of 164.7%. Consolidated operating loss for the first nine months of 1997
was $299,000, compared to an operating loss of $136,200 for the first nine
months of 1996, an increased loss of 119.5%.
IL Changes in Financial Condition; Capitalization
Cash amounted to $35,297 as of September 30, 1997, compared to $5,519
as of September 30, 1996. Net cash used for operating activities was
approximately $247,100 for the first nine months of 1997. The cash used for
operating activities during the period was financed primarily by stockholders,
which included $283,000 in proceeds from the private placement of common
shares and $96,500 in debt proceeds.
Total assets increased during the nine months ended September 30, 1997
by approximately $123,600 to $368,500. Current assets increased approximately
$127,800 due to an increase in cash of $34,200, an increase in accounts
receivable of $27,900 and the current portion of a note receivable from a
stockholder of $70,500. Current liabilities decreased by approximately $8,700
and total liabilities decreased by $4,400. Increases in liabilities, including
stockholder loans totaling $96,500 and accrual of management salaries totaling
$57,500 have been offset by loan payments to stockholders and unrelated
parties totaling approximately $84,000, by a loan and accrued interest due
an unrelated party, totaling $48,300, being settled for $35,500 in cash and
stock, and by accrued management salaries totaling $35,600 having been
converted into the Company's restricted common stock.
As of September 30, 1997 all but 81 of the 247 shares of the Series
"A" Preferred Stock were converted into restricted common stock. Subsequently,
the remaining 81 shares were also converted. Therefore, the entire mandatory
redemption amount of $606,748 that existed at March 31, 1997 has been or will
be added to paid-in capital, thereby reducing the stockholders' deficit.
11
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III. Working Capital/Liquidity
During the nine months ended September 30, 1997, the working capital
deficit decreased by approximately $136,500 to a deficiency of $228,700.
Management has continued the Company's ongoing program of improving working
capital and liquidity through private placements of common shares,
conversion of debt to common shares, and payment of consulting and other labor
services with common shares. During the nine months ended September 30, 1997,
a total of $283,000 was received from the private placement of common shares,
$36,600 in accrued salary and legal fees was converted to common shares, and
approximately $58,600 in various expenses were paid with common shares.
IV. New Developments
Since the fall of 1996, the Company has been in discussions with
Western Farm Service, Inc. (WFS) regarding marketing the Company's Gold'n Gro
fertilizer products. WFS is a wholly owned subsidiary of Agrium, Inc., the
largest nitrogen fertilizer producer in North America and the second largest
retailer of agricultural fertilizer products. In April 1997 WFS initiated a
test marketing program for the Company's Gold'n Gro Iron fertilizer. To date,
WFS field tests of the product have been successful. Test marketing is
ongoing, with the products being tried on a variety of agricultural products,
including grapes. Test marketing of a turf application program which includes
Gold'n Gro Iron and Gold'n Gro 20-1-7 is now being initiated. WFS is also
evaluating Gold'n Gro Manganese. Another Agrium subsidiary, Source-1, is
initiating a test marketing program for all three of the Company's commercial
products.
Over the last several months, the Company has completed product
development of three commercial products, Gold'n Gro 20-1-7, Iron, and
Manganese. Nine additional products are now in the development stage. The next
step in the process of achieving ongoing commercial sales is market develop-
ment. The ongoing discussions with WFS and Source-1 are one aspect of market
development. Other aspects now being pursued include independent marketing of
a turf application program that combines Gold'n Gro Iron and Gold'n Gro 20-1-7
and marketing a "fertigation" program to golf courses and other users with
large turf acreages. As the Company's capitalization improves, marketing at
the retail level will be initiated.
Achieving commercial production, in which a substantial and consistent
volume of fertilizer sales is maintained, is expected to take two to three
years. The fertilizer market, especially the agricultural market, is very
conservative and resistant to change. The Company's Gold'n Gro fertilizer
products are new and generally perform more effectively than existing
competitively priced products produced by existing manufacturers. Because of
this quality/price superiority, the Company believes that its products will
be preferred, once consumers know how effective they are and that they are
readily available. Thus, fertilizer sales volume will likely grow at a steady
pace as a user base is established. It is still too early in the market
development program to accurately predict the rate of sales growth and
resultant volumes.
12
<PAGE>
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
1. The former president of Seahawk, Inc. (Seahawk) filed suit on June
30, 1995 in the Superior Court of California, County of Orange, against the
Company, W&W, and several W&W employees, alleging libel and slander resulting
from consulting work W&W had done for Seahawk. The suit sought unspecified
damages to be proven at trial, plus punitive or exemplary damages. W&W's
liability insurance carrier defended against the suit, and in March 1997, the
suit was dismissed. The individual has filed an appeal of the dismissal. In
February 1997, this individual served a second suit that includes the Company,
W&W, and a key employee as codefendants, along with several unrelated parties.
The suit alleges breach of contract and other causes of action and seeks in
excess of $5 million plus punitive damages. The Company's liability insurance
carrier has agreed to assume the defense of this action with a reservation of
rights, including the right to disclaim insurance coverage. Management
believes the allegations are without merit and is vigorously defending against
the suit.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
(a) As of September 30, 1997, the Company and its subsidiaries were in
default on various promissory notes and secured leases with stockholders
totaling $108,266. Details of these notes are more fully described in Note 3
to the Consolidated Financial Statements included in the Company's Form 10-KSB
for the year ended December 31, 1996. Subsequent to September 30, 1997, a
secured lease in the amount of $21,800 plus accrued interest has been
converted into restricted common stock, fully satisfying the lease agreement.
In addition, a promissory note in the amount of $10,000 will be brought
current by conversion of the accrued interest into common stock, with monthly
payments to resume in January 1998. Monthly payments have resumed on the
remaining notes and leases. No collection action has been taken by the note
and lease holders.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit 11, "Computation of Loss Per Share ",is presented on page
15 of this report.
Exhibit 27, "Financial Data Schedule", is presented on page 16 of
this report.
(b) No reports on Form 8-K were filed by the Company during the
quarter ended September 30, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ITRONICS INC.
DATED: November 11,1997 By: JOHN W. WHITNEY
---------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated
DATED: November 11, 1997 By: JOHN W. WHITNEY
----------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
DATED: November 11, 1997 By: MICHAEL C. HORSLEY
----------------- ---------------------------------
Michael C. Horsley
Controller
(Principal Accounting Officer)
14
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
COMPUTATION OF LOSS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,1997 AND 1996
EXHIBIT 11
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- --------- ----------
Common and common
equivalent shares used in
determining net loss per
share
Weighted average number of
common shares outstanding
during the period(1,000's) 32,476 29,674 31,000 29,236
Common equivalent shares - - - -
---------- ---------- ---------- ----------
32,476 29,674 31,000 29,236
========== ========== ========== ==========
Net income Loss) $(111,806) $ (50,541) $(338,547) $(133,733)
Cumulative preferred dividends
for the period ( 6,240) ( 9,880) (26,000) (29,640)
---------- ---------- ---------- ----------
Net income (loss) less
cumulative preferred
dividends for the period $(118,046) $ (60,421) $(364,547) $(163,373)
========== ========== ========== ==========
Earnings (Loss) per share $( 0.0036) $( 0.0020) $( 0.0118) $( 0.0056)
========== ========== ========== ==========
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-QSB FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 35297
<SECURITIES> 0
<RECEIVABLES> 89939
<ALLOWANCES> 1406
<INVENTORY> 32843
<CURRENT-ASSETS> 237406
<PP&E> 360236
<DEPRECIATION> 240110
<TOTAL-ASSETS> 368457
<CURRENT-LIABILITIES> 466121
<BONDS> 407680
217151
0
<COMMON> 32607
<OTHER-SE> (755102)
<TOTAL-LIABILITY-AND-EQUITY> 368457
<SALES> 177853
<TOTAL-REVENUES> 559309
<CGS> 271102
<TOTAL-COSTS> 565806
<OTHER-EXPENSES> 58384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54102
<INCOME-PRETAX> (338547)
<INCOME-TAX> 0
<INCOME-CONTINUING> (338547)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (338547)
<EPS-PRIMARY> (.012)
<EPS-DILUTED> (.012)
</TABLE>
