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 June 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 ( ).
<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 July 31, 1997, 32,550,546 shares of common stock were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X)
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1997
and December 31, 1996 2
Condensed Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1997 and 1996. 4
Condensed Consolidated Statements of Cash Flows for the
Six months Ended June 30, 1997 and 1996. 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of
Operation 7
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 3. Defaults Upon Senior Securities 11
Item 6. Exhibits and Reports on Form 8- K 11
1
<PAGE>
PART I - FINANCIAL INFORMATIONON
Item 1. Financial Statements
- ----------------------------
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30, 1997 Dec.31, 1996
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 19,801 $ 1,091
Accounts receivable 64,401 60,626
Note receivable, shareholder 39,800 -
Inventories 28,285 28,003
Prepaid expenses 19,558 19,869
--------- ---------
Total Current Assets 171,845 109,589
--------- ---------
PROPERTY AND EQUIPMENT
Leasehold improvements 14,212 14,212
Equipment 221,257 219,214
Vehicles 32,858 32,858
Equipment under capital lease 79,690 79,690
--------- ---------
348,017 345,974
Less: Accumulated depreciation and amortization 233,850 221,730
--------- ---------
114,167 124,244 114,167 124,244
--------- ---------
OTHER ASSETS
Intangibles 8,402 9,002
Note receivable, shareholder 10,200 -
Deposits 2,823 1,993
--------- ---------
21,425 10,995
--------- ---------
$ 307,437 $ 244,828
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
2
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS'(DEFICIT)
<TABLE>
<CAPTION>
June 30, 1997 Dec. 31, 1996
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 111,332 $ 121,200
Accrued expenses 219,289 157,839
Contracts payable 14,303 18,205
Current maturities of long-term debt 31,115 31,115
Due to stockholders 111,200 69,609
Capital lease obligation due stockholder 43,000 37,136
Interest payable 47,526 33,374
Other 6,329 6,326
--------- ---------
Total Current Liabilities 584,094 474,804
--------- ---------
LONG-TERM LIABILITIES
Due to stockholders, less current maturities 107,652 117,057
Accrued salary due officer/stockholder 250,000 250,000
Capital lease obligation due stockholders, less
current maturities 6,522 13,204
Deferred gain, less current maturities 21,385 23,143
--------- ---------
Total Long-Term Liabilities 385,559 403,404
--------- ---------
969,653 878,208
--------- ---------
Series "A" cumulative convertible redeemable
preferred non-voting shares 439,836 596,868
--------- ---------
STOCKHOLDERS' (DEFICIT)
Preferred stock (247 shares outstanding) - -
Common stock ( 31,905,546 shares outstanding at
June 30, 1997 and 29,748,046 outstanding at
December 31, 1996) 31,906 29,748
Additional paid-in capital 1,692,045 1,444,913
Accumulated deficit (3,046,240) (2,819,500)
Common stock to be issued 220,237 114,591
--------- ---------
(1,102,052) (1,230,248)
--------- ---------
$ 307,437 $ 244,828
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Mining technical services $ 124,671 $ 123,083 $ 176,115 $ 253,321
Photobyproduct recycling 28,787 25,801 54,472 130,724
Silver 24,804 24,740 49,063 45,162
Fertilizer 2,490 11,327 2,490 12,699
-------- -------- -------- --------
Total Revenues 180,752 184,951 282,140 441,906
COST OF SALES 172,592 149,886 305,522 374,400
-------- -------- -------- --------
Gross Profit 8,160 35,065 (23,382) 67,506
-------- -------- -------- --------
OPERATING EXPENSES
Depreciation and amort. 5,481 5,670 10,962 11,005
Research and development 9,898 9,610 19,841 19,329
Sales and marketing 22,550 14,523 43,071 28,513
General and administration 48,031 58,224 96,442 105,071
-------- -------- -------- --------
85,960 88,027 170,316 163,918
-------- -------- -------- --------
Operating Income (Loss) (77,800) (52,962) (193,698) ( 96,412)
-------- -------- -------- --------
OTHER INCOME (EXPENSE)
Forgiveness of debt - - - 33,000
Interest expense (17,503) ( 8,644) (33,637) (19,780)
Other, net 594 - 594 -
-------- -------- -------- --------
Total Other Income
(Expense) (16,909) ( 8,644) ( 33,043) 13,220
-------- -------- -------- --------
Income (Loss) before provision
for income taxes (94,709) (61,606) (226,741) ( 83,192)
Provision for income taxes - - - -
-------- -------- -------- --------
Net Income (Loss) $ (94,709) $ (61,606) $(226,741) $( 83,192)
======== ======== ======== ========
Weighted average number of
shares outstanding (1,000's) 30,553 29,318 30,250 29,014
======== ======== ======== ========
Earnings (Loss)
per share $( 0.0034) $( 0.0024) $( 0.0081) $( 0.0035)
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income (1oss) $(226,741) $ (83,192)
Adjustments to reconcile net income (loss)
to cash used by operations
Depreciation and amortization 10,962 11,005
Forgiveness of debt - (33,000)
Expenses paid with stock/notes 26,502 6,024
(Increase) decrease:
Trade receivables ( 3,775) ( 7,952)
Inventories ( 282) ( 7,533)
Prepaids and other assets 1,334 3,786
Increase (decrease):
Accounts payable ( 8,865) ( 2,351)
Accrued expenses 62,548 13,999
Accrued interest 14,152 9,056
-------- --------
Net Cash Used by Operating Activities (l24,l65) (90,158)
-------- --------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Acquisition of property and equipment
and intangibles ( 2,043) (32,267)
-------- --------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Proceeds from sale of common stock 113,550 110,000
Proceeds from debt, stockholders 49,500 27,270
Payments on debt (18,132) (35,329)
-------- --------
Net Cash Provided by Financing Activities 144,918 101,941
-------- --------
Net Increase (Decrease) in Cash 18,710 (20,484)
Cash, beginning of period 1,091 43,411
-------- --------
Cash, end of period $ 19,801 $ 22,927
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six months ended June 30,
1997 are not necessarily indicative of the results to be expected for the
full year.
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
I. Results of Operations
The Company reported a net loss of $94,709 or $(0.0034) per share for
the quarter ended June 30, 1997, compared to a net loss of $61,606 or
$(0.0024) per share for the comparable 1996 period. For the first six months
of 1997, the net loss was $226,741 or $(0.0081) per share, compared to a net
loss of $83,192 or $(0.0035) per share for the comparable 1996 period. Two
primary factors contributed to the decline in earnings for the second quarter
of 1997. First, sales declined approximately $4,200 while cost of sales
increased approximately $22,700, resulting in a decline of gross profit of
$26,900. Second, interest expense increased approximately $8,900 due to
interest on accrued management salaries and additional short-term loans
incurred during the first six months of the year.
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.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> ,
Sales revenue $124,671 $123,083 $176,115 $253,321
Operating income (loss) $ 11,703 $ 24,458 $(18,140) $ 42,489
</TABLE>
- -----------------------------------------------------------------------------
Mining technical services revenue was approximately $124,700 for the
quarter ended June 30, 1997, compared to $123,100 for the comparable quarter
of 1996, a nominal increase. Cost of sales increased by $17,000 due to
increases in pass-through revenues/costs of $10,000, payroll costs for
outside experts of $3,900, and allocated rent costs of $2,000. These factors
resulted in a gross profit for the segment of approximately $43,600 for the
second quarter of 1997, compared to $59,OOO for the second quarter of 1996,
a decline of 26.1 %.
Segment operating expenses declined by approximately $2,600 from the
second quarter of 1996, due to reductions in legal and accounting due to the
timing of the annual audit, partially offset by increases in sales and
marketing and other general and administrative expenses.
The combination of these factors resulted in a 1997 second quarter
segment operating profit of $11,700, compared to approximately $24,500 for
the comparable 1996 quarter, a decline of 52.2%.
7
<PAGE>
For the first six months of 1997, segment revenue totalled approx-
imately $176,100, compared to $253,300 for the first six months of 1996, a
decrease of 30.5%. Operating loss for the period was $18,100, compared to
operating income of $42,500 for the comparable 1996 period, a decrease of
$60,600. The primary factor contributing to the decline was decreased
consulting activity due to management concentration of effort on fertilizer
marketing discussions. The work level on the technical services projects
increased in June 1997 and is expected to continue through the third quarter.
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.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTIONS>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales revenue $ 56,081 $ 61,868 $ 106,025 $ 188,585
Operating income (loss) $(89,503) $(77,420) $(175,558) $(138,901)
</TABLE>
- -----------------------------------------------------------------------------
Total segment sales for the second quarter of 1997 were approximately
$56,100, a decrease of $5,800, or 9.4%, from the second quarter of 1996.
Photobyproduct recycling revenue for the quarter increased by $3,000 compared
to the second quarter of 1996, as a result of a 17.8% increase in volume.
Silver sales increased nominally over the second quarter of 1996. Silver
ounces sold increased 16.8% for the quarter. Sales did not increase propor-
tionately due to an 11.0% decrease in the cumulative average sales price.
Fertilizer sales for the quarter were approximately $2,500, a decline of
$8,800 from the 1996 second quarter. The current year sales include the
initial test marketing order of Gold'n Gro Iron placed by Western Farm
Service, Inc. (WFS). The progress of discussions with WFS are described under
"New Developments" on page 9 of this report. Cost of sales for the second
quarter of 1997 increased approximately $5,700, compared to the second quarter
of 1996. The increase was due primarily to a $5,500 increase in silver costs
relating to all of the current quarter silver sales coming from photobyproduct
processing, whereas in the prior year, a significant portion of silver sales
came from film processing, which has a lower cost factor. These factors
resulted in a gross loss of $35,400 for the second quarter of 1997,
compared to a gross loss of $23,900 for the second quarter of 1996, an
increased gross loss of 48.3%.
Segment operating expenses increased approximately $600 over the
second quarter of 1996, due primarily to an increase in sales and marketing
expenses, which was partially offset by a decrease in legal and accounting
expenses related to the timing of the annual audit.
These factors resulted in a 1997 second quarter segment operating loss
of approximately $89,500, compared to a loss of $77,400 for the second quarter
of 1996, an increased loss of $12,100, or 15.6%.
For the first six months of 1997, segment sales totalled approximate-
ly $106,000, compared to $188,600 for the first six months of 1996, a decrease
of 43.8%. Operating loss for the first six months of 1997 was approximately
8
<PAGE>
$175,600, compared to $138,900 for the first six months of 1996, an increased
loss of 26.4%. 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 sales and marketing expenses due to fertilizer and corporate
marketing efforts.
SUMMARY
On a consolidated basis, then, the various changes in revenues and
operating expenses resulted in a second quarter 1997 operating loss of
$77,800, compared to an operating loss of $53,000 for the second quarter of
1996, an increased loss of 46.9%. Consolidated operating loss for the first
six months of 1997 was $193,700, compared to an operating loss of $96,400
for the first six months of 1996, an increased loss of 100.9%.
IL Changes in Financial Condition; Capitalization
Cash amounted to $19,801 as of June 30, 1997, compared to $22,927 as
of June 30, 1996. Net cash used for operating activities was approximately
$124,200 for the first six months of 1997. The cash used for operating
activities during the period was financed primarily by stockholders, which
included $113,550 in proceeds from the private placement of common shares and
$49,500 in debt proceeds.
Total assets increased during the six months ended June 30, 1997 by
approximately $62,600 to $307,400. Current assets increased approximately
$62,300 due to an increase in cash of $18,700 and the current portion of a
note receivable from a shareholder of $39,800. Current liabilities increased
by approximately $109,300 and total liabilities increased by $91,400. The
increases are primarily attributable to short-term loans from stockholders
totalling $49,500 and accrual of management salaries totalling approximately
$66,900.
During the quarter the Series "A" Preferred shareholders were offered
an exchange of 9,000 common shares for each preferred share. As of June 30,
1997, 78 of the 247 outstanding preferred shares were exchanged, resulting in
a reduction of $176,792 in the Preferred Stock Mandatory Redemption amount and
a corresponding increase in Additional Paid-in Capital.
III. Working Capital/Liquidity
During the six months ended June 30, 1997, the working capital
deficit increased by approximately $47,000 to a deficiency of $412,200.
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 six months ended June 30, 1997, a
total of $113,550 was received from the private placement of common shares,
$6,000 in accrued salary and legal fees was converted to common shares, and
approximately $26,500 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
9
<PAGE>
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-I, is
initiating a test marketing program for all three of the Company's commercial
products.
Over the last few 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 commerial sales is market develop-
ment. The ongoing discussions with WFS and Source-I 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 wiil 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 fertilizer products are
new and work more effectively than the standard fertilizer products now on the
market. The developed Gold'n Gro products generally peform better 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. This means that 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 volumes.
10
<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 June 30, 1997, the Company and its subsidiaries were in
default on various promissory notes and secured leases with stockholders
totalling $151,455. 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 June 30, 1997, two of
these notes have been paid or settled. An obligation due to an unrelated
party, totalling $48,234, was settled by payment of cash and stock valued at
$35,500. This will result in debt forgiveness income of approximately $12,700
and an improvement to working capital of $32,700 in the third quarter
financial statements. Additionally, a note to a stockholder, amounting to
$5,000, has been paid in full.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit 11, "Computation of Loss Per Share ",is presented on page
13 of this report.
Exhibit 27, "Financial Data Schedule", is presented on page 14 of
this report.
(b) No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1997.
11
<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: August 29,1997 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: August 29, 1997 By: JOHN W. WHITNEY
--------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
DATED: August 29, 1997 By: MICHAEL C. HORSLEY
--------------- ---------------------------------
Michael C. Horsley
Controller
(Principal Accounting Officer)
12
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
COMPUTATION OF LOSS PER SHARE
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,1997 AND 1996
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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) 30,553 29,318 30,250 29,014
Common equivalent shares - - - -
---------- ---------- ---------- ----------
30,553 29,318 30,250 29,014
========== ========== ========== ==========
Net income Loss) $ (94,709) $ (61,606) $(226,741) $ (83,192)
Cumulative preferred dividends
for the period ( 9,880) ( 9,880) (19,760) (19,760)
---------- ---------- ---------- ----------
Net income (loss) less
cumulative preferred
dividends for the period $(104,589) $ (71,486) $(246,501) $(102,952)
========== ========== ========== ==========
Earnings (Loss) per share $( 0.0034) $( 0.0024) $( 0.0081) $( 0.0035)
========== ========== ========== ==========
</TABLE>
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-QSB FOR JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 19801
<SECURITIES> 0
<RECEIVABLES> 65807
<ALLOWANCES> 1406
<INVENTORY> 28285
<CURRENT-ASSETS> 171845
<PP&E> 348017
<DEPRECIATION> 233850
<TOTAL-ASSETS> 307437
<CURRENT-LIABILITIES> 584094
<BONDS> 385559
439836
0
<COMMON> 31906
<OTHER-SE> (1133958)
<TOTAL-LIABILITY-AND-EQUITY> 307437
<SALES> 106025
<TOTAL-REVENUES> 282140
<CGS> 173610
<TOTAL-COSTS> 305522
<OTHER-EXPENSES> 30803
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33637
<INCOME-PRETAX> (226741)
<INCOME-TAX> 0
<INCOME-CONTINUING> (226741)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226741)
<EPS-PRIMARY> (.008)
<EPS-DILUTED> (.008)
</TABLE>
