U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
--------------
[ ] 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 1-10196
Dimensional Visions Incorporated
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 23-2517953
- ------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 W. Dunlap, Suite 207, Phoenix, Arizona, 85021
--------------------------------------------------
(Address of principal executive offices)
(602) 997-1990
---------------------------
(Issuer's telephone number)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed 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 for the past 90 days.
Yes [X] No [ ]
As of March 31, 1999, the number of shares of Common Stock issued and
outstanding was 3,696,404.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1999
and June 30, 1998 1
Condensed Consolidated Statement of Operations - For the three
and nine months ended March 31, 1999 and 1998 2
Condensed Consolidated Statement of Cash Flows - For the nine
months ended March 31, 1999 and 1998 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1999 1998
------------ ------------
(Unaudited)
ASSETS
Current assets
Cash $ 2,550 $ 15,910
Current portion of notes receivable 37,574 119,461
Accounts receivable, trade, net of
allowance for bad debts of $215,743 28,492 144,620
Inventory 87,915 69,364
Prepaid expenses 8,621 25,678
------------ ------------
Total current assets 165,152 375,033
------------ ------------
Equipment
Equipment 402,878 370,344
Furniture and fixtures 50,440 24,217
------------ ------------
453,318 394,561
Less accumulated depreciation 271,757 233,509
------------ ------------
181,561 161,052
------------ ------------
Other assets
Notes receivable net of current portion,
net of allowance for bad debts of $360,506 45,589 342,377
Deferred financing costs 27,753 --
Patent rights and other assets 36,774 42,379
------------ ------------
110,116 384,756
------------ ------------
Total assets $ 456,829 $ 920,841
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Short-term borrowings $ 81,640 $ 79,500
Current portion of long-term debt -- 75,000
Current portion of obligations under
capital leases 23,916 16,476
Accounts payable, accrued expenses
and other liabilities 620,068 439,977
------------ ------------
Total current liabilities 725,624 610,953
Long-term debt, net of current portion 485,000 --
Obligations under capital leases 87,549 102,586
------------ ------------
Total liabilities 1,298,173 713,539
------------ ------------
Commitments and contingencies -- --
Stockholders equity (deficiency)
Preferred stock - $.001 par value, authorized
10,000,000 shares; issued and outstanding -
132,911 shares at March 31, 1998, and 133,321
shares at June 30, 1998 133 133
Additional paid-in capital 679,177 683,278
------------ ------------
679,310 683,411
Common stock - $.001 par value, authorized
100,000,000 shares; issued and outstanding -
3,696,404 shares at March 31, 1998 and
3,612,101 shares at June 30, 1998 3,696 3,612
Additional paid-in capital 18,893,153 18,862,075
Deficit (20,417,503) (19,341,796)
------------ ------------
Total stockholders' equity (deficiency) (841,344) 207,302
------------ ------------
Total liabilities and stockholders'
equity (deficiency) $ 456,829 $ 920,841
============ ============
See notes to condensed consolidated financial statements.
(1)
<PAGE>
DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenue $ 28,531 $ 208,526 $ 438,932 $ 380,777
Cost of sales 22,748 72,036 275,052 236,879
----------- ----------- ----------- -----------
Gross profit 5,783 136,490 163,880 143,898
----------- ----------- ----------- -----------
Operating expenses
Engineering and development costs 39,305 69,096 114,199 182,476
Marketing expenses 73,699 7,935 242,671 122,014
General and administrative expenses 152,311 161,193 494,078 463,082
----------- ----------- ----------- -----------
Total operating expenses 265,315 238,224 850,948 767,572
----------- ----------- ----------- -----------
Loss before other income (expenses) (259,532) (101,734) (687,068) (623,674)
----------- ----------- ----------- -----------
Other income (expenses)
Interest expense (18,925) (46,861) (48,634) (76,451)
Interest income 10,726 13,284 32,024 20,496
Forgiveness of accrued compensation -- -- -- 106,148
Loss on sale of equipment -- -- -- (18,881)
Loss on default of note receivable (372,030) -- (372,030) --
Gain on sale of product line -- -- -- 410,000
----------- ----------- ----------- -----------
(380,229) (33,577) (388,640) 441,313
----------- ----------- ----------- -----------
Net loss $ (639,761) $ (135,311) $(1,075,708) $ (182,361)
=========== =========== =========== ===========
Net loss per share of common stock $ (.17) $ (.05) $ (.30) $ (.06)
=========== =========== =========== ===========
Weighted average shares of common stock
outstanding 3,661,478 2,991,376 3,631,670 2,918,623
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
(2)
<PAGE>
DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31,
---------------------------
1999 1998
----------- ---------
Cash flows from operating activities
Net loss ($1,075,708) ($182,361)
Total adjustments to reconcile net loss
to net cash used in operating activities 733,535 (312,170)
----------- ---------
Net cash used in operating activities (342,173) (494,531)
----------- ---------
Cash flows from investing activities
Proceeds from payments on notes receivable 17,428 --
Proceeds from sale of equipment -- 10,000
Purchase of furniture and equipment (58,758) (10,200)
----------- ---------
Net cash used in investing activities (41,330) (200)
----------- ---------
Cash flows from financing activities
Payment of obligations under capital lease (7,597) --
Payment of debt obligations (75,000) (75,000)
Proceeds from issuance of debt net of
deferred financing costs of $34,400 450,600 --
Proceeds from unsecured promissory notes -- 96,000
Deferred offering costs -- (74,564)
Change in short-term borrowing 2,140 --
Proceeds from secured promissory notes, net
of financing costs of $24,500 -- 325,500
Exercise of warrants to purchase common stock -- 10,000
Sale of common stock, net of offering costs -- 135,000
----------- ---------
Net cash provided by financing activities 370,143 416,936
----------- ---------
Net decrease in cash (13,360) (77,795)
Cash, beginning 15,910 109,566
----------- ---------
Cash, ending $ 2,550 $ 31,771
=========== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 25,524 $ --
=========== =========
Issuance of common stock in connection with
Consulting services $ 27,062 $ 21,250
=========== =========
Compensation $ -- $ 2,750
=========== =========
Supplemental disclosure of non-cash investing and financing activities:
During the nine months ended March 31, 1999, 163 shares of the Company's Common
Stock were issued as a result of the conversion of 410 shares of Series C
Convertible Preferred Stock valued at $4,100.
See notes to condensed consolidated financial statements.
(3)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The June 30, 1998, balance sheet data were
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes thereto should be read in
conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998. In the opinion of management, the interim financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for the interim periods presented. The current
period results of operations are not necessarily indicative of results
which ultimately will be reported for the full year ending June 30, 1999.
NOTE 2 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
March 31, 1999 June 30,1998
-------------- ------------
Accounts payable $504,095 $370,633
Accrued expenses
Interest 40,417 20,886
Salaries 75,280 43,587
Payroll Taxes Payable 276 4,871
-------- --------
Total $620,068 $439,977
======== ========
NOTE 3 LONG-TERM DEBT
Long-term debt consisted of the following:
March 31, 1999 June 30,1998
-------------- ------------
12% secured debentures due
July 31, 2001(1) $485,000 $ --
10% secured notes due in January
and February 1998 -- 75,000
-------- -------
485,000 75,000
Less current portion -- 75,000
-------- -------
Long term portion $485,000 $ --
-------- -------
(1) Interest is calculated at 12% per annum and is payable yearly on July
31, beginning July 31, 1999. The Company borrowed $475,000 net of
financing costs of $34,400. The Series A 12% Convertible Secured
Debentures include warrants to purchase 485,000 shares of the
Company's common stock at $0.50 per share. The warrants are
exercisable through January 15, 2001. The notes are secured by all the
assets of the Company, except for the Company's accounts receivable
and assets acquired pursuant to purchase-money financing transactions.
The notes are convertible into one share for each $1.00 of outstanding
debt and unpaid interest is also convertible to common stock at the
rate of one share for each $1.00 of unpaid interest.
(4)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
NOTE 4 COMMITMENTS AND CONTINGENCIES
On January 1, 1998, the Company relocated its offices and entered into a
three year lease at a minimum rental of $44,950 per year.
Effective January 24, 1997, the Company vacated its studio and production
facilities in Philadelphia, Pennsylvania. There are several disputed
invoices outstanding that amount to less than $2,000 that management
expects to resolve in its favor.
On March 12, 1997, Douglas J. Wright filed a lawsuit in the United States
District Court, Eastern District of Pennsylvania, against the Company. Mr.
Wright is a former officer and employee of the Company. In the complaint,
Mr. Wright alleges that he was damaged by the Company's refusal to register
warrants to purchase stock in the Company. Mr. Wright alleges damages in
the amount of $1,549,375, representing the alleged difference between the
market price of the Company's stock and Mr. Wright's costs of exercising
the warrants. Mr. Wright alternatively seeks an injunction against the
Company "from withdrawing or completing its registration statement without
including the stock of the plaintiff." The Company moved to dismiss the
compliant for improper venue, or in the alternative, to transfer to United
States District Court, District of Arizona. The court granted the Company's
motion to transfer. On July 17, 1997, the Company filed its answer,
affirmative defenses and counterclaim. Mr. Wright did not answer the
counterclaim in a timely fashion and the court entered a default judgement
against Mr. Wright on the counterclaim on September 9, 1997. The Company is
seeking summary judgement against Mr. Wright on this claim.
In July 1996, the Company filed a complaint in the United States District
Court for the Eastern District of Pennsylvania (No. 96-CV-5259) against
Dimensional Graphic Sales, Inc. ("DGS"). In the complaint the Company
alleges that it delivered an order to DGS and properly invoiced DGS
pursuant to a sales and marketing agreement. DGS attempted to pay the
invoice in full by tendering a check for an amount less than the full
amount of the invoice and placing a restrictive endorsement on the check
which purported to constitute payment in full for the invoice. The Company
crossed out the restrictive endorsement and attempted to deposit the check
only to subsequently learn that DGS had stopped payment on the check. In
its complaint the Company is seeking $213,522 the full amount of the
invoice together with interest costs and such other relief as the court
deems just and proper. DGS filed a counterclaim against the Company for an
unspecified amount in excess of $100,000. The matter has moved to a
deferred status while the parties engage in settlement negotiation.
There are no other legal proceedings which the Company believes will have a
material adverse effect on its financial position.
The Company has not declared dividends on Series A or B Convertible
Preferred Stock. The cumulative dividends in arrears through March 31, 1999
was approximately $78,300.
NOTE 5 COMMON STOCK
As of March 31, 1999, there are outstanding 4,598,710 of non-public
warrants to purchase the Company's common stock at prices ranging from
$0.25 to $12.50 with a weighted average price of $0.83 per share.
As of March 31, 1999, there were 132,911 shares of various classes of
Convertible Preferred Stock outstanding which can be converted to 98,764
shares of common stock.
(5)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
As of March 31, 1999, there were $485,000 of secured debentures which can
be converted into 485,000 shares of the Company's common stock and $75,000
of unsecured notes which can be converted into 75,000 shares.
The total number of shares of the Company's common stock that would have
been issuable upon conversion of the outstanding debt, warrants and
preferred stock equaled 5,257,474 shares as of March 31, 1999, and would be
in addition to the 3,696,404 shares of common stock outstanding as of March
31, 1999.
The Company issued on September 10, 1998, 127 shares of its common stock as
a result of a conversion of 318 shares of Series C convertible Preferred
Stock.
The Company issued on December 29, 1998, 36 shares of its common stock as a
result of a conversion of 92 shares of Series C convertible Preferred
Stock.
In November and December 1998 the Company issued 29,714 shares of its
common stock to two consultants to the Company.
In the three months ended March 31, 1999, the Company issued 54,428 shares
of its common stock to a consultant to the Company.
NOTE 6 PREFERRED STOCK
The Company has authorized 10,000,000 shares of $.001 par value per share
Preferred Stock, of which the following were issued and outstanding:
Outstanding
------------------------------
Allocated March 31, 1998 June 30, 1998
--------- -------------- -------------
Series A Preferred 100,000 23,000 23,000
Series B Preferred 200,000 5,000 5,000
Series C Preferred 1,000,000 18,271 18,681
Series P Preferred 600,000 86,640 86,640
--------- ------- -------
Total Preferred Stock 1,950,000 132,911 133,321
========= ======= =======
The Company's Series A Convertible 5% Preferred Stock ("Series A
Preferred"), 100,000 shares authorized, is convertible into common stock at
the rate of 1.6 shares of common stock for each share of the Series A
Preferred. Dividends from date of issue are payable from retained earnings,
and have been accumulated on June 30 each year, but have not been declared
or paid.
The Company's Series B Convertible 8% Preferred Stock ("Series B
Preferred"), is convertible at the rate of 4 shares of common stock for
each share of Series B Preferred. Dividends from date of issue are payable
on June 30 from retained earnings at the rate of 8% per annum and have not
been declared or paid.
The Company's Series C Convertible Preferred Stock ("Series C Preferred"),
is convertible at a rate of 0.4 shares of common stock per share of Series
C Preferred.
(6)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
The Company's Series P Convertible Preferred Stock ("Series P Preferred"),
is convertible at a rate of 0.4 shares of common stock for each share of
Series P Preferred.
The Company's Series A Preferred and Series B Preferred were issued for the
purpose of raising operating funds. The Series C Preferred was issued to
certain holders of the Company's 10% Secured Notes in lieu of accrued
interest and also will be held for future investment purposes.
The Series P Preferred was issued on September 12, 1995, to InfoPak
shareholders in exchange for (1) all of the outstanding capital stock of
InfoPak, (2) as signing bonuses for certain employees and a consultant of
InfoPak, and (3) to satisfy InfoPak's outstanding debt obligations to
certain shareholders.
The 190,700 shares of Series B Preferred were issued to holders of warrants
to purchase such preferred stock. The funding for the exercise of these
warrants was the exchange of $1,907,000 of principal amount of secured and
unsecured notes. On December 3, 1996, 185,700 shares of Series B Preferred
were exchanged for 891,360 shares of the Company's common stock.
The 26,275 shares of Series C Preferred were also issued in exchange for
$262,750 of interest due under the secured and unsecured notes. Holders of
8,004 shares of Series C Preferred Stock have subsequently converted their
shares into the Company's common stock.
NOTE 7 INCOME TAXES
There was no provision for current income taxes for the nine months ended
March 31, 1999 and 1998. The federal net operating loss carry forwards of
approximately $16,539,000 expire in varying amounts through 2018.
The Company has had numerous transactions in its common stock. Such
transactions may have resulted in a change in the Company's ownership, as
defined in the Internal Revenue Code Section 382. Such change may result in
an annual limitation on the amount of the Company's taxable income which
may be offset with its net operating loss carry forwards. The Company has
not evaluated the impact of Section 382, if any, on its ability to utilize
its net operating loss carry forwards in future years.
NOTE 8 EVENTS SUBSEQUENT TO MARCH 31, 1999
During April 1999, the Company received additional short-term financing of
$160,000 in the form of notes due in six months with an interest rate of
12% and an extension period of three months at 15%. The notes are
convertible at the rate of four shares of stock for every dollar converted.
(7)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company had a working capital deficiency of
$560,472, compared with a working capital deficiency of $485,598 as of
March 31, 1998. Total assets as of March 31, 1999, were adjusted by
$360,500 as a result of establishing an allowance for bad debts on a
defaulted note receivable. The current portion of the note receivable which
was classified as a current asset totaling approximately $170,000 was
reclassified to other assets. The Company has been unable to collect the
required monthly payments from the noteholder. The Company has exhausted
its efforts and at this time management is not confident that this note
will be paid. There was a restructuring of the note in the second quarter
to give the noteholder some breathing room to complete some corporate
restructuring to repay the note in full. This restructuring was never
completed and the payments due on the note ceased. The note and related
allowance for bad debts will be carried on the books until the issue can be
resolved.
During the three months ended March 31, 1999, the Company received
additional short-term financing of $75,000 in the form of six month 12%
convertible notes. These notes pay at an interest rate of 12% and have a
three month extension period at an interest rate of 15%. The notes are
convertible at the rate of one shares of stock for every dollar converted.
In addition, during April an additional $160,000 was received by the
Company (See Note 8).
The Company requires additional working capital in order to maintain its
current level of operations. The Company anticipates raising additional
capital through either a private placement of preferred stock or
debentures. There can be no assurances that the Company will be able to
obtain funds. The Company has been financing its operations by factoring
its accounts receivable and deferring certain accounts payable.
RESULTS OF OPERATIONS
The net loss for the quarter ended March 31, 1999, was $639,761 compared to
a net loss of $135,311 for the quarter ended March 31, 1998. The primary
reasons for the greater loss for the quarter ended March 31, 1999, compared
to the quarter ended March 31, 1998, was significantly lower operating
revenue and the write-off of a notes receivable, including accrued interest
of $11,524, totaling $372,030. Without the write-off for bad debt, the net
loss for the quarter ended March 31, 1999, would have been $267,731.
Revenue for the quarter ended March 31, 1999, was $28,531 compared to
revenue of $208,526 for the quarter ended March 31, 1998. The lack of
operating revenue for the quarter ended March 31, 1999, is primarily the
result of a substantial effort by management of the Company to secure
capital to maintain current operations, fulfill larger orders, and position
the Company where it is able to grow.
NINE MONTHS ENDED MARCH 31, 1999 AND 1998
LIQUIDITY AND CAPITAL RESOURCES
In July 1998 the Company paid off $75,000 of debt that was secured by all
of the assets of the corporation. During the nine months ended March 31,
1999, the Company raised $485,000 through the placement of its Series A 12%
Convertible Secured Debentures (see Note 3). An additional $75,000 was
raised through the issuance of short-term 12% convertible notes.
Additionally, approximately $97,400 of accounts receivable have been
factored to meet short term cash needs.
(8)
<PAGE>
The Company is focusing most of its resources and efforts towards marketing
its print products. Therefore, it has offered its subsidiary, InfoPak,
Inc., for sale. The Company needs additional funding in order to maintain
current operations. The Company is not generating sufficient revenues from
operations to cover its cost structure and has been funding its operations
by selling its securities in private placements, short-term borrowing, and
sale of its products.
RESULTS OF OPERATIONS
The net loss for the nine months ended March 31, 1999, was $1,075,708
compared to a net loss of $182,361 for the nine months ended March 31,
1998. The nine months ended March 31, 1998, would have resulted in a net
loss of $698,509 without the forgiveness of accrued compensation by certain
officers of the Company totaling $106,149 and without the sale of the
InfoPak Real Estate Product Line totaling $410,000. The nine months ended
March 31, 1999, would have resulted in a net loss of $703,678 without the
write-off of the note receivable associated with the sale of the InfoPak
Real Estate Product Line. The loss before other income and expenses for the
nine months ended March 31, 1999, was $687,068 compared to a loss before
other income and expenses for the nine months ended March 31, 1998, of
$623,674.
Revenue for the nine months ended March 31, 1999, was $438,932 compared to
a revenue of $380,777 for the nine months ended March 31, 1998. For the
nine months ended March 31, 1999, the Company recorded sales totaling
approximately $326,199 0f its DV3D(R) AnimotionTM print products compared
to sales of approximately $186,965 for the nine months ended March 31,
1998. Although the revenue for the nine months ended March 31, 1999, is
higher than for the nine months ended March 31, 1998, the majority of the
Company's fiscal year 1999 sales came from the first six months of
operations. As indicated in the results of operations for the three months
ended March 31, 1999, the Company has been unable to focus its efforts on
sales during the third quarter (see Results of Operations for the Three
Months ended March 31, 1999).
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
1. The following Exhibits are filed herein:
27.0 Financial Data Schedule
2. Reports on Form 8-K filed:
None
(9)
<PAGE>
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, duly authorized.
DIMENSIONAL VISIONS INCORPORATED
DATED: May 10, 1999 By: /s/ John D. McPhilimy
------------------------------------------
John D. McPhilimy, Chairman, President and
Chief Executive Officer
(10)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 2,550
<SECURITIES> 0
<RECEIVABLES> 281,809
<ALLOWANCES> 215,743
<INVENTORY> 87,915
<CURRENT-ASSETS> 165,152
<PP&E> 453,318
<DEPRECIATION> 271,757
<TOTAL-ASSETS> 456,829
<CURRENT-LIABILITIES> 725,624
<BONDS> 0
0
679,310
<COMMON> 3,696
<OTHER-SE> (1,524,350)
<TOTAL-LIABILITY-AND-EQUITY> 456,829
<SALES> 438,932
<TOTAL-REVENUES> 438,932
<CGS> 275,052
<TOTAL-COSTS> 275,052
<OTHER-EXPENSES> 1,222,978
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,634
<INCOME-PRETAX> (1,075,708)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,075,708)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> 0
</TABLE>
