SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL QUARTER
ENDED January 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 0-17500
VERSUS TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 22-2283745
(State or other jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification Number)
2320 West Aero Park Court
Traverse City, Michigan 49686
(Address of principal executive offices)
616-946-5868
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (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 twelve
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 .
The aggregate market value of the Common Stock held by
nonaffiliates of the registrant on January 31, 1996 was
approximately $15,649,651.
Number of shares of Common Stock, par value $.01 per share,
outstanding as of January 31, 1996: 18,845,697.
<PAGE>
VERSUS TECHNOLOGY, INC.
Index to
Financial Statements and Schedules
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Balance Sheets as of January 31, 1996
(Unaudited) and October 31, 1995 (Audited) 3-4
Statements of Operations for the three
and three months ended January 31, 1996 and
1995 (Unaudited) 5
Statements of Shareholders' Equity
for the three months ended January 31, 1996
and 1995 (Unaudited) 6-7
Statements of Cash Flows for the three
and nine months ended January 31, 1996 and
1994 (Unaudited) 8-9
Condensed Notes to Financial Statements 10-14
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-17
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 17
Item 2 - Changes in Securities 17-18
Signatures 19
<PAGE>
VERSUS TECHNOLOGY, INC.
Balance Sheets
January 31, October 31,
1996 1995
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 1,384,000 $ 1,998,000
Trade accounts receivable (net
of allowance for doubtful
accounts of $25,000 at January
31, 1996 and $25,000 at
October 31, 1995) 64,000 88,000
Assets held for sale (Part II
Item 1) 3,000 3,000
Inventories (Note 5) 30,000 11,000
Prepaid expenses and other
current assets 49,000 79,000
Total current assets 1,530,000 2,179,000
Property and equipment - net
(Note 6) 41,000 3,000
Deferred charges and other
assets (Note 7) 299,000 253,000
$ 1,870,000 $ 2,435,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable 478,000 508,000
Accrued expenses 360,000 395,000
Deferred revenue - 9,000
Note payable - current (Note 8) 90,000 110,000
Total current liabilities 928,000 1,022,000
Note payable - long term (Note 8) 339,000 339,000
Total liabilities 1,267,000 1,361,000
Shareholders' equity:
Common stock, $.01 par value,
25,000,000 shares authorized;
18,910,697 shares issued and
outstanding on October 31,
1995; 18,910,697 shares issued,
18,485,697 shares outstanding,
425,000 shares held in treasury 185,000 190,000
Additional paid-in capital 23,388,000 23,410,000
Accumulated Deficit (22,970,000) (22,526,000)
Total shareholders'
equity 603,000 1,074,000
$ 1,870,000 $ 2,435,000
See accompanying condensed notes to financial statements.
<PAGE>
VERSUS TECHNOLOGY, INC.
Statement of Operations
(Unaudited)
Three Months Ended
January 31,
1996 1995
Revenues:
Sales $ 35,000 $ 321,000
Cost of sales 29,000 234,000
Gross margin 6,000 87,000
Expenses:
Research and development 160,000 118,000
Sales, general, and
administrative 248,000 575,000
408,000 693,000
Income (Loss) from
operations ( 402,000) ( 606,000)
Other income (expense):
Interest income 23,000 8,000
Interest expense ( 1,000) ( 4,000)
Loss on debt settlement ( 18,000) -
Gain/Loss on sale of DCX
(Note 4) 13,000 424,000
Gain/Loss on sale of
subsidiary (Note 3) - 365,000
17,000 793,000
Net income (loss) before
provision for income
taxes ( 385,000) 187,000
Provision (benefit) for income
taxes - -
Net income (loss) ( 385,000) $ 187,000
Net income (loss) per common
share (Note 9) ( .02) .04
See accompanying condensed notes to financial statements.
<PAGE>
<TABLE>
VERSUS TECHNOLOGY, INC.
Statement of Shareholders' Equity
(Unaudited)
<CAPTION>
Common Common Treasury Add'l
Three Months Ended Stock Shares Shares Paid-In Accumulated
January 31, 1996 Shares Amount Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C> <C>
Balance, October
31, 1995 18,910,697 *$ 190,000 $ - $23,410,000 *$(22,526,000) $1,074,000
Issuance of common
stock:
Shares purchased as
Treasury Shares ( 425,000) ( 4,000) ( 21,000) ( 60,000)
Net loss for the
three months ended
January 31, 1996 ( 385,000) ( 470,000)
Balance,
January 31, 1996 18,485,697 $ 189,000 $( 4,000)*$23,388,000 $(22,970,000) $ 603,000
Common Common Treasury Add'l
Three Months Ended Stock Shares Shares Paid-In Accumulated
January 31, 1995 Shares Amount Amount Capital Deficit Total
Balance, October
31, 1995 4,160,780 $ 42,000 $ - $20,834,000 $(20,029,000) $ 847,000
Issuance of common
stock:
Shares issued pursuant
to Incentive Stock
Option Plan - - - - - -
Net loss for the
three months ended
January 31, 1995 ( 187,000) ( 187,000)
Balance,
January 31, 1995 4,160,780 $ 42,000 $ - $20,843,000 $(20,216,000) $ 660,000
*Rounding differences on audited financial statements: Common shares 189,000; Accumulated
deficit (22,525,000) and on first quarter financial statements; Additional paid in capital
(22,388,000).
See accompanying condensed notes to financial statements.
/TABLE
<PAGE>
VERSUS TECHNOLOGY, INC.
Statements of Cash Flow
(Unaudited)
Three Months Ended
January 31,
1996 1995
Cash flows from operating
activities:
Net Income (loss) $( 385,000) $ 187,000
Adjustments to reconcile
net income (loss) to net
cash used in operating
activities:
Depreciation and amortization 15,000 74,000
Rounding differences ( 2,000) -
Loss on disposal of fixed
assets - 1,000
Recovery of bad debt - ( 12,000)
Gain on sale of DCX - ( 424,000)
Gain on sale of subsidiary - ( 365,000)
Increase and decrease in assets
and liabilities:
(Increase) decrease in accounts
receivable and accounts
receivable - other 24,000 279,000
Adjustment to assets held
for sale - 25,000
Increase in inventories ( 19,000) ( 76,000)
(Increase) decrease in prepaid
expenses and other current
assets 31,000 6,000
Increase (decrease) in
accounts payable and other
liabilities ( 30,000) ( 414,000)
Decrease in accrued expenses ( 35,000) ( 88,000)
Decrease in deferred revenues
- customer advance payments ( 9,000) ( 52,000)
Total adjustments ( 25,000) (1,046,000)
Net cash used in operating
activities ( 410,000) ( 859,000)
Cash flows from investing activities:
Proceeds from assets held for
sale - 1,255,000
Principal received on notes
receivable - 698,000
Additions to property and
equipment ( 39,000) ( 12,000)
Additions to deferred charges
and other assets ( 60,000) ( 10,000)
Deletions from deferred charges - 13,000
Net cash provided by
investing activities ( 99,000) 1,944,000
Cash flows from financing activities:
Payments on obligation under
capital lease - ( 4,000)
Payments on notes payable ( 20,000) ( 202,000)
Purchase of treasury stock ( 85,000) -
Net cash provided by (used
in) financing activities ( 105,000) ( 206,000)
Net increase (decrease) in cash
and cash equivalents ( 614,000) 879,000
Cash and cash equivalents,
beginning of period 1,998,000 64,000
Cash and cash equivalents,
end of period 1,384,000 943,000
Supplemental disclosures of
cash flow information:
Cash paid during the year for
interest 782 4,000
Supplemental disclosures of
non-cash investing and financing
activities:
During fiscal 1995,
approximately $449,000 of accounts
payable were renegotiated to a
note payable.
See accompanying condensed notes to financial statements.
<PAGE>
VERSUS TECHNOLOGY, INC.
Condensed Notes to Financial Statements
January 31, 1996
(1) Description of Business
Versus Technology, Inc. (the "Company") has two lines of
business, the IR tracking System and a cellular line. The Company
sees its future in the business of IR Tracking Systems. These
systems permit the instantaneous identification and tracking of
the location of people and equipment, can be used to control
access, and permit instantaneous two-way communication. The
Company believes that this technology will have a wide range of
applications. The system is based on the Company's patented
proprietary technology involving the transmission and reception
of infrared light for use in tracking multiple subjects in
several areas. During the fiscal year 1995, the Company
significantly downsized its manufacturing operations, moved its
headquarters and principal operating facilities, ceased
production and distribution of a significant product line, and
focused development efforts on infrared product technology.
Primary engineering activities include software design,
development, hardware development and integration, testing,
system integration installation, maintenance, support, and
training. The Company commenced formal marketing of its system on
August 1, 1995. The first market being addressed by the Company
is the medical industry. Several demonstration systems, however,
were already in place and operating with high levels of customer
satisfaction. There have been only limited sales to date.
The Company also manufactures and distributes a number of
cellular products for data transmission and cellular alarm
transport. The Company's products can handle the sending of alert
notices, such as alarm reporting for fire, burglar, health,
security, and other alert communication requirements. The
Company's CAT products manufacturing began in late 1993. As a
result of the settlement of a patent infringement suit during the
fourth quarter of the 1995 fiscal year, the greater portion of
the CAT products sold by Versus at the beginning of fiscal 1995,
have now been discontinued.
On September 29, 1995, the Company completed a Private
Placement of 14,674,917 shares of its common stock to accredited
investors at $0.20 per share. After payment of bridge loans, the
net proceeds of $2,428,050 are being used to develop the IR
Tracking business and for general operating expenses.
(2) Summary of Significant Accounting Policies
In the opinion of the management of the Company, the
accompanying unaudited consolidated financial statements of the
Company include all adjustments necessary to present fairly the
financial position of the Company, in all material respects, as
of January 31, 1996 and the results of operations and cash flows
for the three month periods ended January 31, 1996 and 1995. The
results for the three month periods ended January 31, 1996 and
1995, are not necessarily indicative of the results to be
expected for the full fiscal year.
Inventories:
Inventories are stated at the lower of cost (first-in,
first-out method) or market.
Property and equipment:
Property and equipment are carried at cost and depreciated
over estimated useful lives, principally on the straight-line
method for financial reporting purposes and accelerated methods
for income tax purposes.
The estimated useful lives used for determination of
depreciation and amortization for financial reporting purposes
are: machinery and equipment - 3 to 10 years; furniture and
fixtures - 3 to 10 years.
Revenue recognition:
Revenue from product sales is recognized when the related
goods are shipped and all significant obligations of the Company
have been satisfied. The Company generally offers a 90 day
warranty on its products. Costs incurred to service products
under warranty, which have not been significant, are charged to
operations when incurred.
Deferred revenue - customer advance payments:
Revenue from advanced payments received from customers is
deferred until all revenue recognition criteria are satisfied.
Statements of cash flows:
For the purpose of the statements of cash flows, the
Company considers all investments with a maturity of three months
or less at date of purchase to be cash equivalents.
(3) Sale of Majority-Owned Subsidiary
On July 13, 1992, the Company completed the sale of all of
its capital stock of VTL, and certain other patented technology
owned by the Company, to a newly formed organization headed by
the management of VTL and other investors. The purchase price
was approximately $1,653,000 plus repayment of indebtedness from
VTL to the Company of approximately $647,000. The Company
received $500,000 at closing with the balance deferred in
periodic payments over the next 22 months. Of these deferred
payments $1,250,000 were collateralized by a subordinated lien on
the assets of VTL. In addition, as part of this transaction, the
Company was released from its guarantee obligation under an
$800,000 principal amount term loan obtained by VTL in 1992 and
was obligated to pay closing fees of approximately $260,000 of
which approximately $200,000 was to be paid over a period of
twenty-two months. VTL also licensed to the Company, rights in
the United States and certain other countries to use the
technology sold to VTL.
The Company has realized a net gain from this transaction
of approximately $1,100,000 (adjusted to reflect actual amount of
cash received). Due to the fact that the common stock and
certain other patented technology was sold to a highly-leveraged
group of investors, the gain was deferred and recognized ratably
as cash was collected. The Company recognized the balance,
$365,000, of this gain in the first quarter of 1995 and none in
1994.
(4) Sale of DCX Product Line
On November 30, 1994, the Company sold the assets, and
certain liabilities related to its derived channel multiplex
product line (DCX). The purchase price was approximately
$1,255,000, all of which was received at closing. The Company
realized a gain of $424,000 on this transaction, in the first
quarter fiscal 1995.
In addition, as part of the terms of the transaction, the
Company received payment of $600,000 which was due to the Company
from the sale of outstanding amounts due the Company ($698,000 as
of October 31, 1994) offset by obligations of the Company for
closing fees ($98,000 as of October 31, 1994).
(5) Inventories
Inventories are summarized as follows:
January 31, October 31,
1996 1995
Raw Materials $ 10,000 $ 11,000
Work in progress 39,000 41,000
Finished goods 1,000 65,000
Inventory reserve ( 20,000) -
$ 30,000 $ 11,000
(6) Property and Equipment
Property and equipment are summarized as follows:
January 31, October 31,
1996 1995
Machinery, equipment and
vehicle $ 154,000 $ 114,000
Furniture and fixtures 25,000 25,000
179,000 139,000
Less accumulated
depreciation 138,000 136,000
$ 41,000 $ 3,000
Substantially all of the Company's property and equipment
related to the discontinued cellular activities were sold or
written down to net realizable value as a result of the Telular
litigation settlement on fiscal year ended 1995 (see Part II,
Item 1) and the move of headquarters and principal operations to
Michigan. Additions were made to equipment in first quarter 1996
comprised primary of computer equipment.
(7) Deferred Charges and Other Assets
Deferred charges and other assets are summarized as
follows:
January 31, October 31,
1996 1995
Patents and trademarks $ 366,000 $ 365,000
Deferred computer
software costs 59,000 -
425,000 365,000
Less accumulated
amortization 126,000 112,000
$ 299,000 $ 253,000
(8) Note Payable
On August 1, 1995, the Company signed a note payable,
renegotiating accounts payable to one of its law firms to a note
for $449,000. The note bears interest at a floating annual rate
and requires 13 monthly installments of $10,000 which commence on
December 1, 1995, and a balloon payment for the entire remaining
principal balance on January 1, 1997. The note is secured by
certain patents of the Company. The future principal amounts due
under the aforementioned loan are as follows:
1996 $ 90,000
1997 339,000
449,000
On September 29, 1994, the Company borrowed $200,000 from
five individuals (including three Directors of the Company
totaling $120,000) for operational cash flow purposes. The notes
bear interest at a rate of 8% payable semi-annually and are due
on December 31, 1995. Such amounts were paid in full as of
October 31, 1995.
(9) Net Income (Loss) per Share
Net income (loss) per share is based upon the weighted
average number of shares outstanding of 18,910,697 and 4,160,780
for the three months ended January 31, 1996 and January 31, 1995
respectively. The effect of the Company's common stock
equivalents (options and warrants) was antidilutive for both
periods.
(10) Relocation
The Company closed its New Jersey location in September
1995, and moved all operations of the Company to the Traverse
City, Michigan office location. All related costs of this
relocation, including the write down of non-essential fixed
assets to net realizable value, have been recognized in the
accompanying financial statements.
(11) Related Parties
The President and Chief Executive Officer of the Company
is also a member of the Board of Directors and a stockholder of
Olmsted Engineering.
Olmsted Engineering provided a number of resources to
Versus Technology, Inc. for the fiscal year ended October 31,
1995, including research and development, pass-through billings,
use of office space and development of a business plan.
The Company believes services provided by Olmsted have
been negotiated at arm's length at the fair value of goods and
services received. The Company is currently maintaining its
headquarters and principal operating facilities at the business
location of Olmsted, free of rent charges.
Additionally, Olmsted has the option to merge into Versus
at $.25 a share based upon the Olmsted book value, provided the
book value of Olmsted shall be no greater than $1.5 million
dollars. The right to merge is further conditioned upon the
receipt of a fairness opinion that the fair market value of
Olmsted is greater than or equal to its book value and the
shareholders of Versus approve the merger.
(12) Loss on Debt Settlement
Loss on debt settlement for first quarter fiscal 1996,
consisted of the final tender of payment to Telular on a
judgement related to patent infringement (see Part II, Item 1)
and negotiated payment and resolution of a disputed lease
obligation for lease of a copier.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
General
The Registrant, Versus Technology, Inc. (the "Company")
designs, manufactures and markets data and security transport
equipment.
In connection with the move of the Company's headquarters
and principal operations to Traverse City, Michigan, the Company
has now refocused itself as a manufacturer of infrared tracking
systems and specifically cellular products. The Company's
strategy going forward will be to meaningfully expand sales of
medical tracking and monitoring systems, develop a portfolio of
service contracts with third parties, exploit the medical and
health fields, and to pursue other markets. The Company intends
to enter the governmental, professional, and manufacturing
markets with its infrared technology products.
Results of Operations
Three Months Ended January 31, 1996 and January 31, 1995
Total revenues for the first quarter of fiscal 1996 of
$35,000 were $285,000 or 89% below the corresponding quarter in
fiscal 1995. This decrease in revenues is primarily due to the
discontinuance of certain cellular product sales. The Company is
continuing its development of infrared products and expects this
product line to be the Company's primary focus in fiscal 1996.
Cost of sales as a percentage of revenues in the first
quarter of fiscal 1995 increased to 83% from 73% for the same
quarter in fiscal 1995. This change was primarily due to
continuing change in product mix and the development of the
Infrared Tracking System. As the infrared product line begins to
expand, the cost of sales is targeted to be considerably less
than that of the cellular product.
The Company's selling, general, and administrative
expenses for the first quarter of fiscal 1996 were $248,000 or
60% lower than in the first quarter of fiscal 1995. This decrease
was primarily due to the Company's downsizing of its sales and
marketing efforts in addition to cost reductions associated with
the move of its headquarters and principal operations in
Michigan. Research and development expenses for the first quarter
of fiscal 1996 were $160,000 or 36% above these same expenses of
$118,000 for the first quarter in fiscal 1995. The Company's
continuing program of new product enhancements and developments
account for the increase in these expenditures.
In the first fiscal quarter of 1996, other income and
expense decreased 776,000 or 98% from 1995 levels due primarily
to the recognition of the last installment of deferred gain of
$365,000 associated with the sale of the Company's subsidiary in
1992, and the gain associated with the sale of the DCX product
line in the amount of $424,000 in the first quarter of fiscal
1995.
The Company's first quarter fiscal 1996 net loss of
($385,000) or (.02) per share reflects a decrease in revenues due
to the change in the product mix and development of the infrared
system, the move from Trenton, New Jersey to Traverse City,
Michigan, and a significant decrease in gains recognized from the
sale of DCX. The first quarter of fiscal 1995 net income of
$187,000 or .04 per share reflects $365,000 or .08 per share from
the sale of VTL, and $424,000 or $.10 per share from the sale of
DCX in November, 1994.
Comparable net loss from operations of $402,000 in the
first quarter of 1996 versus the net loss from operations of
($606,000) in the first quarter of fiscal 1995 is primarily due
to the general reduction of selling and administrative expenses,
a change in product mix, and the move to Traverse City, Michigan.
Liquidity and Capital Resources
During the three (3) months ended January 31, 1996, the
Company relied primarily on cash generated from operations and a
private placement of common stock. On September 29, 1995, the
Company completed a Private Placement of which generated net
proceeds to the Company of approximately $2.7 million dollars.
The Company used $550,000 of the proceeds to repay certain notes
payable, and the remainder will be used for working capital. The
Company believes that the combination of the above working
capital and cash generated from operations should be sufficient
to meet projected cash needs over the next nine (9) months. There
can, however, be no assurance that the Company will be successful
in generating sufficient operating revenue during fiscal 1996
which will be sufficient for all projected an/or unforeseen cash
needs.
Significant liquidity factors are as follows:
January 31, October 31,
1996 1995
Current ratio 1.3:1 2.1:1
Quick ratio 1.2:1 2.0:1
Miscellaneous
The Company believes that new accounting pronouncements,
which have yet to be implemented, will not materially effect the
financial condition or results of operations of the Company.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
A judgment has been entered against the Company in the
current fiscal year 1995 in connection with litigation relating
to the exercise of warrants. On November 11, 1995, a judgement
relating to pending litigation was entered against the Company in
an amount of approximately $195,000. The Company was required to
segregate and restrict funds in an amount sufficient to cover
this judgment, and has done so in the first quarter of fiscal
1996. The Company is appealing this decision.
The Company's defense in a patent infringement suit proved
unsuccessful. A judgment in the amount of approximately $132,000
was entered against the Company. This judgment was settled by
transferring $121,000 in inventory to the Plaintiff. On January
11, 1996, the Company tendered final payment relating to the
satisfaction of a judgment for patent infringement against the
Company.
In connection with the patent infringement judgment, the
Company has written down all inventory, intangible assets, and
fixed assets related to the product line named in the lawsuit to
net realizable value during fiscal 1995.
On January 26, 1996, the Company entered into an agreement
to lease building space from an officer of the Company. The term
of the lease commitment is 5 years, at an amount of $4,750 per
month. The start date of the lease term has not been determined,
as the building construction has not been completed.
Item 2 - Changes in Securities
In February 1995, the Board of Directors amended the Class
A Warrants to provide for limited additional exercise rights
after their scheduled expiration date (February 15, 1995) through
the close of business (New York Time) on February 15, 1996, as
follows: After February 15, 1995, upon exercise and payment of
$1.75 cash, holders of Class A Warrants will be issued one share
of Versus common stock for each four Class A Warrants owned of
record on the exercise date. Class A Warrants expired on February
15, 1996.
On January 26, 1996, the Chairman of the board of
Directors and Chief Financial Officer resigned from the Company.
In connection with his resignation, the individual signed a Stock
Redemption Agreement and a Nonqualified Stock Option Agreement
with the Company. The Company repurchased 425,000 shares from the
individual, which were placed into treasury stock, and designated
for issuance to employees for future incentive plans. The options
issued to the individual are for the purchase of 100,000 shares
at an exercise price of $.50 per share, at any time for a period
of 5 years from the date of issuance.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
VERSUS TECHNOLOGY, INC.
(Registrant)
By:GARY T. GAISSER
Gary T. Gaisser
President and Chief Executive Officer
By:DEBRA A. BOYER
Debra A. Boyer
Chief Financial Officer, Treasurer,
and Principal Accounting Officer
March 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JAN-31-1996
<CASH> 1,384,000
<SECURITIES> 0
<RECEIVABLES> 89,000
<ALLOWANCES> 25,000
<INVENTORY> 30,000
<CURRENT-ASSETS> 1,530,000
<PP&E> 179,000
<DEPRECIATION> 138,000
<TOTAL-ASSETS> 1,870,000
<CURRENT-LIABILITIES> 928,000
<BONDS> 0
0
0
<COMMON> 185,000
<OTHER-SE> 418,000
<TOTAL-LIABILITY-AND-EQUITY> 1,870,000
<SALES> 35,000
<TOTAL-REVENUES> 35,000
<CGS> 29,000
<TOTAL-COSTS> 437,000
<OTHER-EXPENSES> 19,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> (385,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (385,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (385,000)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
