UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
(Mark One)
(X) Quarterly report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934, for the quarterly period ended July 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 0-17872
ECHO SPRINGS WATER CO., INC.
(Exact name of small business issuer as specified in its charter)
New York #16-1433379
(State of Incorporation) (I.R.S. Employer ID No.)
Building 100A, Hackensack Avenue, Kearny, New Jersey 07032
(Address of Principal Executive Offices)
(201) 465-5151
(Issuer's Telephone Number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1997
Common stock, $.0001 par value 3,557,149 shares
Transitional Small Business Disclosure Format Yes No X
<PAGE>
ECHO SPRINGS WATER CO., INC.
Index to Form 10-QSB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Page
Item Number
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements:
Consolidated balance sheets -
July 31, 1997 and October 31, 1996 3
Consolidated statements of operations -
Three months ended July 31, 1997 and 1996 4
Nine months ended July 31, 1997 and 1996 5
Consolidated statements of cash flows -
Nine months ended July 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Events 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ECHO SPRINGS WATER CO., INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
July 31, October 31,
1997 1996
Current Assets:
Cash $ 27,501 $ 44,631
Accounts receivable - net of allowance
for doubtful accounts of $5,000 in
1997 and $14,000 in 1996 287,723 257,212
Notes receivable, current portion 27,204 26,010
Inventories 31,213 34,221
Prepaid expenses 35,876 30,178
--------- ---------
Total Current Assets 409,517 392,252
Notes receivable, net of current portion 139,313 159,868
Property, plant and equipment - net 1,318,516 1,278,230
Other assets 261,353 220,026
--------- --------
TOTAL ASSETS $2,128,699 $2,050,376
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Current portion of debt $ 457,000 $ 552,153
Debentures 47,000 50,000
Accounts payable and accrued expenses 1,395,867 1,513,582
Customer deposits 313,700 213,000
Unearned revenues 15,762 17,677
--------- ---------
Total Current Liabilities 2,229,329 2,346,412
--------- ---------
Shareholders' Equity (Deficiency):
Common stock, $.0001 par, 75,000,000
shares authorized; issued and
outstanding 3,557,149 shares
in 1997 and 2,907,149 shares in 1996 356 291
Additional paid-in capital 8,551,660 7,967,725
Accumulated deficit (8,652,646) (8,264,052)
--------- ---------
Total Shareholders'
Equity (Deficiency) (100,630) (296,036)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) $2,128,699 $2,050,376
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
- 3 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31,
(UNAUDITED)
1997 1996
---- ----
Revenues:
Gross sales $ 593,087 $ 604,174
Credits and allowances (49,321) (2,528)
Freight out (13,024) (10,796)
Other income 7,940 29,015
--------- ----------
538,682 619,865
--------- ----------
Costs and Expenses:
Cost of sales 193,295 222,780
Selling, general and
administrative 420,341 360,792
Interest 10,434 51,434
Amortization of other assets 1,219 1,219
Other (income) expenses - net - (1,016)
Gain on sale of assets - (1,875)
--------- ----------
Total Costs and Expenses 625,289 633,334
--------- ----------
Net loss $ (86,607) $ (13,469)
--------- ==========
Net loss per share $ (.02) $ (.01)
========= ==========
Weighted average shares outstanding 3,557,149 1,979,996
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
- 4 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JULY 31,
(UNAUDITED)
1997 1996
---- ----
Revenues:
Gross sales $1,545,318 $ 1,698,482
Credits and allowances (115,498) (9,203)
Freight out (32,812) (32,861)
Other income 11,636 43,433
--------- ----------
1,408,644 1,699,851
--------- ----------
Costs and Expenses:
Cost of sales 562,657 661,714
Selling, general and
administrative 1,196,628 1,094,294
Interest 36,809 167,016
Amortization of other assets 3,657 3,657
Other (income) expenses - net - (1,016)
Gain on sale of assets (2,513) (5,235)
--------- ----------
Total Costs and Expenses 1,797,238 1,920,430
--------- ----------
Net loss $ (388,594) $ (220,579)
========= ==========
Net loss per share $ (.12) $ (.12)
========= ==========
Weighted average shares outstanding 3,334,927 1,779,996
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
- 5 -
<PAGE>
- 6 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31,
(UNAUDITED)
1997 1996
---- ----
Operating Activities:
Net loss $(388,594) $(220,579)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 127,149 115,836
Gain on sale of assets (2,513) (5,235)
Provision for doubtful accounts (9,000) (16,000)
Changes in assets and liabilities -
Accounts receivable (21,511) (36,996)
Inventories 3,008 8,594
Prepaid expenses (5,698) (18,780)
Other assets (31,416) 11,450
Accounts payable and
accrued expenses (117,715) (45,739)
Customer deposits 100,700 22,500
Unearned revenues (1,915) (30,815)
-------- --------
Net Cash Used by
Operating Activities (347,505) (215,764)
-------- --------
Investing Activities:
Capital expenditures (173,240) (46,983)
Collections on notes receivable 19,361 10,149
Proceeds from sale of assets 11,975 5,235
-------- --------
Net Cash Used
by Investing Activities (141,904) (31,599)
-------- --------
Financing Activities:
Proceeds from issuance
of common stock 584,000 180,000
Increase in debt 287,000 190,000
Repayment of debt (385,153) (166,493)
Deferred public offering costs (13,568) -
-------- -----
Net Cash Provided by
- 7 -
<PAGE>
Financing Activities 472,279 203,507
-------- --------
Net decrease in cash (17,130) (43,856)
Cash - beginning 44,631 57,224
-------- --------
CASH - ENDING $ 27,501 $ 13,368
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 34,523 $ 11,959
Conversion of accounts receivable
to notes receivable - 22,750
Conversion of other assets
to notes receivable - 1,370
The accompanying notes are an integral part of these consolidated financial
statements.
- 8 -
</TABLE>
<PAGE>
ECHO SPRINGS WATER CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
BASIS OF PRESENTATION
The interim consolidated financial statements are prepared
pursuant to the requirements for reporting on Form 10-QSB. The
October 31, 1996 balance sheet data was derived from audited
consolidated financial statements and together with the
interim consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial
statements and notes included in the Company's latest annual
report on Form 10-KSB/A. In the opinion of management, the
interim consolidated financial statements reflect all
adjustments of a normal recurring nature neces sary for a fair
statement of the results for interim peri ods. The current
period results of operations are not necessarily indicative of
results which ultimately will be reported for the full fiscal
year.
BUSINESS
Echo Springs Water Co., Inc. ("the Company"), through its
subsidiaries, is engaged principally in the distribution of
bottled water and allied products. The Company bottles water
from its own natural springs in Burlington, NY for direct
distribution and sale to business and residential customers as
well as for wholesale to supermarkets and other bottled water
distributors.
REVENUE RECOGNITION
Revenue from equipment rental is recognized based on the
period in which it is earned and unearned revenue is re corded
for the portion billed in advance. Revenues from product sales
are recognized upon shipment to the wholesal er or delivery to
the customer, as applicable.
LOSS PER SHARE
Net loss per share is based upon the weighted average number
of shares outstanding during each period. All share and per
share amounts give effect to a 1-for-25 reverse stock split in
October, 1996.
- 9 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2 - INVENTORIES
-----------
Inventories are valued at the lower of cost or market on the
first-in, first-out basis and at October 31, 1996 and July 31,
1997 consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
July October
31, 1997 31, 1996
Bottles $ 1,969 $ 1,722
Product held for sale 16,526 16,415
Supplies 12,718 16,084
------ ------
$31,213 $34,221
</TABLE>
====== ======
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment are recorded at cost and
depreciated by the straight-line method over the estimated
economic useful lives of the various asset groups of 5 - 40
years and consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
July October
31, 1997 31, 1996
Land $ 150,000 $ 150,000
Buildings and improvements 362,298 362,298
Water coolers, bottles and
brewers 1,024,198 918,730
Machinery and equipment 390,821 335,069
Vehicles 60,500 60,850
Furniture and fixtures 126,393 127,128
--------- ---------
2,114,210 1,954,075
Less: accumulated depreciation
and amortization 795,694 675,845
--------- ---------
$1,318,516 $1,278,230
========= =========
</TABLE>
NOTE 4 - OTHER ASSETS
------------
Other assets at October 31, 1996 and July 31, 1997 are
comprised of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
July October
31, 1997 31, 1996
Water rights $205,000 $205,000
Accumulated amortization 37,186 33,529
------- -------
Net deferred charges 167,814 171,471
Security deposits 61,953 30,537
Deferred public offering costs 31,586 18,018
------- -------
$261,353 $220,026
======= =======
</TABLE>
- 10 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 - INDEBTEDNESS
------------
The Company is currently in default as to principal and
interest on its debt and debentures except for advances
payable to stockholder of $282,153 at October 31, 1996 and
$137,000 plus $100,000 of 8% notes payable at July 31, 1997.
Although the debt is in default and therefore currently due,
the debtholders have informally agreed to wait for payment
until completion of the proposed public offering. (See Note
7).
NOTE 6 - INCOME TAXES
------------
The Company files a consolidated federal income tax return
with its subsidiaries. At October 31, 1996, the estimated
maximum amount of net operating loss carryforward available to
reduce future taxable income is approximately $8,200,000,
expiring from 2004 through 2010. Deferred tax benefits from
the use of net operating loss carryforwards of approximately
$2,780,000 are offset by a corresponding amount of valuation
allowance since it is more likely than not that all or some
portion of the defered tax asset will not be realized.
NOTE 7 - GOING CONCERN
-------------
The Company sustained losses of $228,571 (before extraordi
nary gain) for the fiscal year ended October 31, 1996 and
$388,594 for the nine months ended July 31, 1997. The Company
had deficit net worths of $296,036 at October 31, 1996 and
$100,630 at July 31, 1997. In addition, the Compa ny was in
default on principal and interest payments on a substantial
portion of its debt. These facts raise sub stantial doubt
about the Company's ability to continue as a going concern.
Considerations which tend to mitigate the question of going
concern include management's successful efforts in raising
funds through private placements, the ability to renegotiate
and restructure long-term financing with major creditors, past
and present efforts to convert debt to equity and the ability
to acquire, restructure and develop the bottled water business
which it believes will be able to achieve profitable
operations. In June, 1996, the Company entered into
negotiations to consummate a public offering with minimum
gross proceeds of approximately $4,000,000. The Company
intends to use a protion of the proceeds of the proposed
public offering to seek and consum mate acquisitions of
companies in the bottled water and allied products business.
No assurance can be given that the Company will be successful
in identifying potential acquisitions or, if made, that such
acquisitions will have a beneficial effect on the Company. The
Company has no cur rent agreement to acquire any business or
property, or intent to acquire any specific business or
property. The Company believes that these factors provide
meaningful evidence as to the Company's ability to continue in
operat ion for the next fiscal year and support the going
concern presentation in the accompanying consolidated
financial statements in favor of the liquidation basis. There
can be no assurance, however, that management will continue to
be able to raise sufficient capital or convert existing debt
to equity or to achieve profitable operations going forward.
- 11 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JULY 31, 1997 COMPARED WITH THE
NINE MONTHS ENDED JULY 31, 1996
Gross sales decreased $153,164 (9.0%) to $1,545,318 for the nine months ended
July 31, 1997 ("1997") from $1,698,482 for the nine months ended July 31, 1996
("1996"). Five-gallon sales to Aramark Corporation increased by approximately
$175,000, due to increased sales of approxi mately $38,000 to their continuing
New York and New Jersey operations plus the Company's expansion into this
customer's Pennsylvania loca tions, which accounted for the remaining
approximately $137,000. However, five-gallon and allied product sales to and
rental income from the Company's regular customer base fell by approximately
$77,000, $48,000 and $56,000, respectively, largely due to a deliberate discon
tinuance of service to marginal customers and a lack of sales and marketing
staff as the Company concentrated its efforts toward the Aramark business as
this business requires no capital investment outlay for cooler equipment and
provides its own sales and marketing at no additional cost to the Company. The
2.5-gallon sales fell by approxi mately $17,000 as this low-margin, low-volume
product line was discon tinued in July, 1996. Sales of one gallons and one
quarts, other low-margin products, decreased by approximately $124,000 and
$4,000, largely due to a discontinuance of service to one supermarket customer
and the loss of one of the Company's distributors which has completed its own
bottling facility. Credits and allowances increased by approximately $106,000 as
a result of a half-price discount offered to Aramark for three months (March 10
through June 8, 1997) as an incentive to obtain their Pennsylvania business.
Other income in 1996 included approximate ly $32,000 of discounts earned upon
the renegotiation and settlement of five older payables, which event did not
recur in 1997.
Cost of sales for 1997 was $562,657 (36.4% of gross sales) as compared to
$661,714 (39.0% of gross sales) for 1996. This 2.6 percentage point improvement
is comprised of a 4.0 percentage point gain due to the above-noted reductions in
the sales of low-margin product lines, offset by a 1.4 percentage point increase
caused by the above-noted decrease in the equipment rental portion of gross
sales.
Selling, general and administrative expenses were $1,196,628 in 1997 as compared
to $1,094,294 in 1996. Delivery and warehouse costs increased approximately
$70,000, primarily due to start-up of the Pennsylvania operations plus a 50%
truck rental price increase in May, 1996. Further, general and administrative
expenses rose by approximately $50,000. Increased clerical costs accounted for
approximately $26,000. The investor relation costs of the debt-to-equity
conversion and the reverse stock split accounted for another approximately
$9,000 and the final factor was increased business development costs of
approximately $13,000 to investigate new potential business investments. These
increases were offset by reduced selling costs of approximately $18,000. Reduced
yellow page advertising accounted for approximately $10,000. Third party
commissions fell approximately $7,000 as a result of the above-noted reductions
in sales of low-margin product lines.
Interest expense decreased from $167,016 in 1996 to $36,809 in 1997, primarily
as a result of the October, 1996 debt-to-equity conversion. Amortization of
other assets of $3,657 in 1997 and 1996 related to the amortization of water
rights.
The net loss for 1997 increased by $168,015 from $220,579 in 1996 to $388,594 in
1997.
- 12 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 1997 COMPARED WITH THE
THREE MONTHS ENDED JULY 31, 1996
Gross sales decreased $11,087 (1.8%) to $593,087 for the three months ended July
31, 1997 ("1997") from $604,174 for the three months ended July 31, 1996
("1996"). Five-gallon sales to Aramark Corporation increased by approximately
$102,000, due to increased sales of approxi mately $12,000 to their continuing
New York and New Jersey operations plus the Company's expansion into this
customer's Pennsylvania loca tions, which accounted for the remaining
approximately $90,000. However, five-gallon and allied product sales to and
rental income from the Company's regular customer base fell by approximately
$19,000, $11,000 and $9,000, respectively, largely due to a deliberate discon
tinuance of service to marginal customers and a lack of sales and marketing
staff as the Company concentrated its efforts toward the Aramark business as
this business requires no capital investment outlay for cooler equipment and
provides its own sales and marketing at no additional cost to the Company. The
2.5-gallon sales fell by approxi mately $5,000 as this low-margin, low-volume
product line was discontin ued in July, 1996. Sales of one gallons and one
quarts, other low-margin products, decreased by approximately $63,000 and
$5,000, largely due to a discontinuance of service to one supermarket customer
and the loss of one of the Company's distributors which has completed its own
bottling facility. Credits and allowances increased by approximately $47,000 as
a result of a half-price discount offered to Aramark for three months (March 10
through June 8, 1997) as an incentive to obtain their Pennsylvania business.
Other income in 1996 included approximate ly $24,000 of discounts earned upon
the renegotiation and settlement of three older payables, which event did not
recur in 1997.
Cost of sales for 1997 was $193,295 (32.6% of gross sales) as compared to
$222,780 (36.9% of gross sales) for 1996. This 4.3 percentage point improvement
is comprised of a 5.3 percentage point gain due to the above-noted reductions in
the sales of low-margin product lines, offset by a 1.0 percentage point increase
caused by the above-noted decrease in the equipment rental portion of gross
sales.
Selling, general and administration expenses were $420,341 in 1997 as compared
to $360,792 in 1996. Delivery and warehouse costs increased approximately
$36,000, primarily due to start-up of the Pennsylvania operations plus a 50%
truck rental price increase in May, 1996. Further, general and administrative
expenses rose by approximately $18,000, largely due to increased clerical and
professional costs and business development. In addition, selling costs
increased by approxi mately $6,000 due to the lack in 1997 of the bad debt
expense credit which arose in 1996.
Interest expense decreased from $51,434 in 1996 to $10,434 in 1997, primarily as
a result of the October, 1996 debt-to-equity conversion. Amortization of other
assets of $1,219 in 1997 and 1996 related to the amortization of water rights.
The net loss for 1997 increased by $73,138 from $13,469 in 1996 to $86,607 in
1997.
- 13 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have been cash generated from sales,
issuance of common stock, debentures and installment debt, and borrowings from
its officers.
During the nine months ended July 31, 1997 and 1996, the Company had negative
cash flows from operating activities of $347,505 and $215,764, respectively.
Investing activities used cash of $141,904 in 1997 and $31,599 in 1996,
primarily for the acquisition of property and equip ment. The Company has
financed its operating and investing activities during these periods primarily
through the issuance of common stock and installment debt.
At July 31, 1997, the Company had a working capital deficiency of $1,819,812.
Short-term credit sources are limited to trade credit on purchases and services.
The report issued by the Company's accountants that accompanies the Company's
Consolidated Financial Statements for the year ended October 31, 1996 states
that there is a substantial doubt about the Company's ability to continue as a
going concern.
As indicated in Note 5 to the accompanying Consolidated Financial Statements,
certain of the Company's indebtedness is in default. Although the debt is in
default and therefore currently due, the debtholders have informally agreed to
wait for payment until completion of the proposed public offering noted below.
Considerations which tend to mitigate the question of going concern include
management's successful efforts in raising funds through private placements, the
ability to renegotiate and restructure long-term financing with major creditors,
past and present efforts to convert debt to equity and the ability to acquire,
restructure and develop the bottled water business which it believes will be
able to achieve profitable operations.
In June, 1996, the Company entered into negotiations to consummate a public
offering with minimum gross proceeds of approximately $4,000,000. Such offering
is expected to take place during Fiscal 1997. The Company intends to use a
portion of the proceeds of the proposed public offering to seek and consummate
acquisitions of companies in the bottled water and allied products business. No
assurance can be given that the Company will be successful in identifying
potential acquisitions or, if made, that such acquisitions will have a
beneficial effect on the Company. The Company has no current agreement to
acquire any business or property, or intent to acquire any specific business or
property.
The Company believes that these factors provide meaningful evidence as to the
Company's ability to continue in operation for the next fiscal year and support
the going concern presentation in the accompanying Consolidated Financial
Statements in favor of the liquidation basis. There can be no assurance,
however, that management will continue to be able to raise sufficient capital or
convert existing debt to equity or to achieve profitable operations going
forward.
The Company has no plans or commitments for capital expenditures during the next
twelve months other than the ordinary equipment purchases which are expected to
be funded with additional installment debt. The Company is close to settling its
prior years' unpaid payroll taxes and, upon agreement, intends to pay such
amounts from additional borrowings.
The Company's business is subject to seasonal fluctuation, with summer being the
busiest season and winter the slowest. To date, seasonality has not had any
material effect on the Company's financial condition or results of operations.
- 14 -
<PAGE>
ECHO SPRINGS WATER CO., INC.
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
There have been no new legal proceedings or material changes
to legal proceedings during the period from those reported in
the Company's Form 10-KSB/A for the year ended October 31,
1996.
ITEM 5. Other Events
None
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits - None
b. Reports on Form 8-K - None
- 15 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the issuer has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
ECHO SPRINGS WATER CO., INC.
(Issuer)
By
Michael S. Rakusin
President
Dated: September , 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the nine months ended July 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 27,501
<SECURITIES> 0
<RECEIVABLES> 202,723
<ALLOWANCES> 5,000
<INVENTORY> 31,213
<CURRENT-ASSETS> 409,517
<PP&E> 2,114,210
<DEPRECIATION> 795,694
<TOTAL-ASSETS> 2,128,699
<CURRENT-LIABILITIES> 2,229,329
<BONDS> 0
0
0
<COMMON> 356
<OTHER-SE> (100,986)
<TOTAL-LIABILITY-AND-EQUITY> 2,128,699
<SALES> 1,397,008
<TOTAL-REVENUES> 1,408,644
<CGS> 562,657
<TOTAL-COSTS> 562,657
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,809
<INCOME-PRETAX> (388,594)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (388,594)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> 0
</TABLE>
