U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
COMMISSION FILE NUMBER: 33-27610-A
MEDICAL TECHNOLOGY & INNOVATIONS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-2954561
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3125 NOLT ROAD, LANCASTER, PA 17601
(Address of principal executive offices) (Zip Code)
(717) 892-6770
(Issuer's telephone number, including area code)
Check whether the issuer (1) has 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 December 31, 1997 25,092,010 shares of Common Stock, no par
value, of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's annual report filed with the Securities
and Exchange Commission on Form 10-KSB, filed December 2, 1997.
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MEDICAL TECHNOLOGY & INNOVATIONS, INC.
TABLE OF CONTENTS
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1997 and June 30, 1997 4
Condensed Consolidated Income Statements
For the Three and Six Months ended December 31, 1997 and 1996 (Unaudited) 5
Condensed Consolidated Statements of Stockholders'
Equity (Unaudited) 6
Condensed Consolidated Statements of Cash Flows
For the Six Months ended December 31, 1997 and 1996 (Unaudited) 7
Notes to Condensed Consolidated
Financial Statements 8
Item 2. Management's Discussion and Analysis or
Plan of Operation 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 13
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2
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PART I - FINANCIAL INFORMATION
3
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MEDICAL TECHNOLOGY & INNOVATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31 AND JUNE 30, 1997
ASSETS
December 31, June 30,
(Unaudited) 1997
----------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 196,923 $58,090
Accounts Receivable, less allowances of
$36,367 540,799 407,633
Inventory 621,549 692,273
Prepaid Expenses 28,310 36,477
---------- ----------
Total Current Assets 1,387,581 1,194,473
---------- ----------
FIXED ASSETS
Land 382,000 382,000
Equipment, less accumulated depreciation
of $292,129 and $223,881, respectively 893,237 956,388
---------- ----------
Fixed Assets, net 1,275,237 1,338,388
OTHER ASSETS
Intangible and Other Assets 2,603,886 2,716,280
---------- ----------
TOTAL ASSETS $5,266,704 $5,249,141
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $568,272 $418,341
Accrued Liabilities 617,399 384,995
Current Maturities of Long-Term Debt 701,880 732,997
---------- ----------
Total Current Liabilities 1,887,551 1,536,333
LONG-TERM DEBT, NET OF CURRENT MATURITIES 1,627,390 1,020,040
---------- ----------
TOTAL LIABILITIES 3,514,941 2,556,373
---------- ----------
STOCKHOLDERS' EQUITY
Common Stock, no par value, authorized
700,000,000 shares, outstanding 25,092,010
and 16,730,729 shares, respectively 9,310,170 6,755,260
Series A Convertible Preferred Stock, $100
par value, authorized 70,000 shares,
outstanding nil and 496 shares,
respectively - 0 - 4,407,810
Series B Convertible Preferred Stock,
$100 par value, authorized 1000 shares,
267 outstanding 1,602,000 - 0 -
Preferred Stock, authorized 100,000,000 shares
$1,000 par value, 12%, noncumulative,
Outstanding 22.5 shares 22,500 22,500
Treasury Stock, at cost (309,742) (309,742)
Accumulated Deficit (8,873,165) (8,183,060)
---------- ----------
Total Stockholders' Equity 1,751,763 2,692,768
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,266,704 $5,249,141
========== ==========
</TABLE>
The accompanying notes are an integral part
of the condensed financial statements.
4
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<CAPTION>
MEDICAL TECHNOLOGY & INNOVATIONS, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996 (UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,425,376 $1,014,945 $2,410,000 $1,847,037
Cost of Goods Sold 908,102 771,914 1,650,173 1,389,261
---------- ---------- ---------- ----------
Gross Profit 517,274 243,031 759,827 457,776
---------- ---------- ---------- ----------
Operating Expenses
Advertising 33,680 238,441 70,746 304,646
Selling, General,
and Administrative 612,175 881,336 1,253,870 1,660,396
---------- ---------- ---------- ----------
Total Operating Expenses 645,855 1,119,777 1,324,616 1,965,042
---------- ---------- ---------- ----------
(Loss) from Operations (128,581) (876,746) (564,789) (1,507,266)
Interest expense, net 75,908 31,009 125,316 79,637
---------- ---------- ---------- ----------
Net (Loss) from Operations ($204,489) ($907,755) ($690,105) ($1,586,903)
Add: Gain on Restructuring of Series A
Preferred Stock 948,163 - 0 - 948,163 - 0 -
---------- ---------- ---------- ----------
Net Income (Loss) Attributable to
Common Stock $743,674 ($907,755) $258,058 ($1,586,903)
======== ========= ======== ===========
Basic Earnings Per Share
Net Operating (Loss) per common share ($.011) ($.032) ($.039) ($.124)
======== ========== ========= ===========
Net Income (Loss) per common share after
Gain on Restructuring of Series A
Preferred Stock $.042 ($.032) $.014 ($.124)
======== ========== ========= ===========
</TABLE>
Note: In accordance with Financial Accounting Standards No. 128,
"Earnings per Share" the difference between basic earnings per share
and diluted earnings per share is not material.
The accompanying notes are an integral part
of the condensed financial statements.
5
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MEDICAL TECHNOLOGY & INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Series A Series B
Convertible Convertible
Common Common Preferred Preferred
Shares Stock Stock Stock
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995 11,205,036 $1,435,407
Issuance of Common Stock 1,306,409 1,147,076
Exercise of Stock Options 735,084 1,102,427
Stock Issued for Services 217,520 462,230
Purchase of Treasure Shares (1,316,750)
Net Loss
---------- ----------
BALANCE AT JUNE 30, 1996 12,147,299 $4,147,140
---------- ----------
Sale of 70,000 Series A
Convertible Preferred Stock,
Net of issuance costs $6,220,700
Conversions of Preferred Stock
Into Common Stock 3,697,576 $1,846,390 (1,812,890)
Exercise of Stock Options 194,737 292,105
Issuance of Common Stock 532,898 270,250
Stock Issued for Services 215,000 199,375
Purchase of Treasury Shares (56,781)
Net Loss
---------- ---------- ----------
BALANCE AT JUNE 30, 1997 16,730,729 $6,755,260 $4,407,810
---------- ---------- ----------
Net Loss
Issuance of Common Stock 144,509 $25,000
Conversion of Series A Preferred
Stock into common stock 8,216,772 1,581,747 ($1,581,747)
Gain on Restructuring of Series A
Preferred Stock 948,163 (1,224,063)
Issuance of Series B Preferred
In exchange for Series A (1,602,000) $ 1,602,000
---------- ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1997 25,092,010 $9,310,170 - 0 - $1,602,000
========== ========== =========== ===========
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<TABLE>
<CAPTION>
Total
Preferred Treasury Accumulated Stockholders'
Stock Stock Deficit Equity
--------- -------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995 $56,000 ($2,781,730) ($1,290,323)
Issuance of Common Stock 1,147,076
Exercise of Stock Options 1,102,427
Stock Issued for Services 462,230
Purchase of Treasure Shares ($250,000) (250,000)
Net Loss (1,893,771) (1,893,771)
--------- --------- ----------- -----------
BALANCE AT JUNE 30, 1996 $ 56,000 ($250,000) ($4,675,501) ($722,361)
--------- --------- ----------- -----------
Sale of 70,000 Series A
Convertible Preferred Stock,
Net of issuance costs $6,220,700
Conversions of Preferred Stock
Into Common Stock ($33,500)
Exercise of Stock Options 292,105
Issuance of Common Stock 270,250
Stock Issued for Services 199,375
Purchase of Treasury Shares ($59,742) (59,742)
Net Loss ($3,507,559) (3,507,559)
--------- --------- ----------- -----------
BALANCE AT JUNE 30, 1997 $22,500 ($309,742) ($8,183,060) $2,692,768
--------- --------- ----------- -----------
Net Loss ($690,105) ($690,105)
Issuance of Common Stock 25,000
Conversion of Series A Preferred
Stock into common stock
Gain on Restructuring of Series A
Preferred Stock (275,900)
Issuance of Series B Preferred
In exchange for Series A
--------- --------- ----------- -----------
BALANCE AT DECEMBER 31, 1997 $22,500 ($309,742) ($8,873,165) $1,751,763
========= ========= =========== ===========
</TABLE>
The accompanying notes are an integral part
of the condensed financial statements.
6
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MEDICAL TECHNOLOGY & INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
Six Months Ended December 31,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($690,105) ($1,586,903)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and Amortization 180,135 149,789
(Increase) Decrease in Accounts Receivable (133,166) 53,169
(Increase) Decrease in Inventory 70,726 (277,935)
Decrease in Prepaid Expenses 8,167 91,149
Increase in Accounts Payable 149,929 29,038
Increase in Accrued Liabilities 232,404 155,346
Stock issued for services - 0 - 112,500
------------ ----------
Net cash used in operating activities (181,910) (1,273,847)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Net Assets of Steridyne (4,436,635)
Purchase of Fixed Assets (4,590) (151,447)
------------ ----------
Net cash used in investing activities (4,590) (4,588,082)
CASH FLOWS FROM FINANCING ACTIVITIES:
Costs incurred for restructuring of
Series A Preferred Stock (275,900) - 0 -
Proceeds from issuance of Series A
preferred stock, net - 0 - 6,220,700
Proceeds from issuance of stock, net 25,000 150,000
Proceeds from exercise of stock options, net - 0 - 292,106
Acquisition of Treasury Stock - 0 - (57,357)
Proceeds from issuance of notes payable 730,729 241,529
Repayment of notes payable (154,496) (577,042)
--------- --------
Net cash from financing activities 325,333 6,269,936
Net increase in cash and cash equivalents 138,833 408,007
Cash and cash equivalents at beginning of period 58,090 273,942
------------ ----------
Cash and cash equivalents at end of period $ 196,923 $ 681,949
============ ==========
</TABLE>
The accompanying notes are an integral part
of the condensed financial statements.
7
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MEDICAL TECHNOLOGY & INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. CONDENSED FINANCIAL STATEMENTS. The unaudited condensed
consolidated financial information contained in this report
reflects all adjustments (consisting of normal recurring
accruals) considered necessary, in the opinion of management,
for a fair presentation of results for the interim periods
presented. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted. These financial statements should
be read in conjunction with the financial statements and notes
thereto included in the Company's June 30, 1997 Annual Report
on Form 10-KSB. The results of operations for periods ended
December 31 are not necessarily indicative of operations for
the full year.
2. STOCK OPTION PLANS. In October of 1995 officers of the Company
were granted options to acquire up to 2.0 million shares of
common stock at an exercise price of $1.50 per share. The
options are exercisable ratably over a three year period
commencing with the quarter ending June 30, 1996.
In April of 1996 the Company's shareholders approved the 1996
Stock Option Plan, which allows the board of directors to
grant up to 3.0 million options. During fiscal 1997, 1,250,000
options have been granted.
In September of 1997, the Board of Directors reduced the
exercise price on all options granted to the Chief Executive
Officer, President and Executive Vice President of the Company
to $.25.
The following is a summary of stock option transactions:
Outstanding, July 1, 1997 3,239,936
Options granted 0
Options exercised 0
Options cancelled (500,000)
---------
Outstanding, December 31, 1997 2,739,936
=========
Exercisable, end of period 1,163,397
=========
3. PREFERRED STOCK. The Company has three classes of preferred
stock. The $1,000 par value convertible preferred stock is
convertible into 14,985 shares of the Company's common stock
The Series A convertible preferred stock was convertible into
approximately 30 million shares of the Company's common stock
as of September 30, 1997. The Series A preferred stock
conversion rate was the lower of the approximate market rate
or $2.72.
During September of 1997, the Company renegotiated terms with
the Series A Preferred Shareholders and as a result, all
Series A Preferred Shares were exchanged for a combination of
cash, common stock, a new Series B Preferred stock and an
amended warrant certificate with an exercise price of $1.00
per share in cash. Series A Preferred shareholders owning 217
outstanding shares elected to receive $3,800 in cash in
exchange for their Series A Preferred shares with a face value
of $10,000. Series A Preferred shareholders owing 267
outstanding shares agreed to exchange their Series A Preferred
shares for a new Series B Preferred share with a $100 par
value, a face value of $6000 with accretion at 8% from October
1, 1997 plus 10,000 shares of the Company's common stock. The
new Series B Preferred stock is convertible into common stock
beginning October 1, 1998 at a fixed conversion price of $1.00
per share.
8
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Conversion is limited to 10% per month of the shares held
until February 28, 1999 and 20% per month thereafter. The
conversion feature doubles provided the Company's common stock
closing bid price for ten consecutive days is greater than
$2.00 per share. The Company has the option of redeeming the
Series B Preferred shares at any time in cash, at 110% of the
original face value of the Series B Preferred shares including
accretion, or in the Company's common stock valued at the
average closing bid price for the 30 days prior to the
redemption at 120% of the original face value of the Series B
Preferred shares including accretion. The Company is required
to redeem the Series B Preferred stock on September 30, 2000.
The common stock issued to Series B Preferred shareholders is
subject to the following lockup schedule:
Maximum
Date Tradeable
---- ---------
December 1, 1997 250 shares
January 1, 1998 750 shares
February 1, 1998 1,500 shares
April 1, 1998 2,500 shares
July 1, 1998 5,500 shares
October 1, 1998 10,000 shares
As a result of the restructuring of the Series A Preferred
Stock, the common stock holders have received a gain of
approximately $948,000.
4. WARRANTS. The Company has issued warrants to purchase 4.3
million shares of common stock as of December 31, 1997. The
warrants relate to grants made in connection with an equity
issuance and various services rendered. The warrants can be
exercised at prices ranging from $.25 to $2.72 per share. 3.1
million warrants expire in July 2001. Pursuant to terms
renegotiated in September of 1997 between the Company and
holders of Series A Preferred Shares issued in July of 1996,
the exercise price of approximately 1.8 million warrants will
be reduced from $2.72 to $1.00.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This analysis should be read in conjunction with the condensed consolidated
financial statements, the notes thereto, and the financial statements and notes
thereto included in the Company's June 30, 1997 Annual Report on Form 10-KSB.
All nonhistorical information contained in this Form 10-QSB is a forward-looking
statement. The forward looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward looking statements. Factors that
might cause such differences include, but are not limited to the following, a
slower acceptance of the MTI PhotoscreenerTM in the marketplace, increased
foreign competition putting pricing pressures on Steridyne products, changes in
economic trends and other unforeseen situations or developments. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTH PERIODS ENDED DECEMBER 31, 1997 AND 1996
Revenues for the first half of fiscal 1998 increased by $562,963 or a 30%
increase. This increase results because of increased demand for the MTI
PhotoScreener(TM) from retail optical chains, service clubs and schools
9
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combined with good growth in the core Steridyne business. Gross profit for the
first half of fiscal 1998 increased by 66% versus the comparable period in
fiscal 1997 mostly due to sales increases and mix as overall margins are
comparable between the two periods. MTI products generally have higher profit
margins than Steridyne products.
Operating expense decreased by 33% from $1,965,042 in the first half of fiscal
1997 to $1,324,616 in the comparable period in fiscal 1998. This reduction is
evident in almost all expense categories with the greatest savings in the
employment and public relations areas. Exclusive of Steridyne, the number of
full time employees has been cut back by over one-third from the first half of
fiscal 1998 versus 1997. Management expects general and administrative costs to
continue at the same rate for the third quarter of fiscal 1998. Interest expense
has increased 57% to $125,316 for the first six months of fiscal 1998 versus
1997 because of the debt incurred to fund the restructuring of the Series A
Preferred shares and higher interest costs associated with factoring the
Company's receivables to increase cash flow.
Management expects a lower net loss from operations for the third fiscal quarter
of 1998 because of increased sales and continued cost controls.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997 the Company had cash of $196,923 and working capital of
($499,970) as compared to $58,090 and ($341,860) at June 30, 1997. The increase
in the working capital deficit is partially due to the inclusion of $343,750 of
subordinated convertible notes in the current liabilities. Assuming the
subordinated notes are put to the Company for conversion, the Company intends to
honor the put by issuing common stock.
In September of 1997 the Company reached an agreement with the holders of the
Series A Preferred shares issued in July of 1996 to amend certain term and
conditions of the issue subject to the Company completing the required
financing. All Series A Preferred shareholders were given the option of electing
("Option 1") a cash payment of $3,800 per share or ("Option 2") 10,000 shares of
the Company's common stock and a new Series B Preferred share with a $6,000 face
in exchange for 1 share of the original Series A Preferred. All Series A
Preferred shareholders will also have the exercise price reduced on all warrants
applicable to tendered Series A Preferred Shares from $2.72 to $1.00. The new
Series B Preferred Stock is convertible into common stock of the Company from
October 1, 1998 at a fixed price of $1.00. Conversion is limited to 10% of the
holding for the first four months following October 1, 1998 then it is increased
to 20% per month thereafter. The Series B Preferred stock can be redeemed by the
Company at any time but is mandatory on September 30, 2000.
Common stock issued to Series A Preferred Stockholders electing Option 2 is
subject to a lock-up which ends on October 1, 1998.
In connection with securing financing for Option 1 of the Series A Preferred
restructuring, the Company raised an additional $719,000 for general working
capital purposes. The Company recruited new senior management who instituted
significant reductions in employees, inventory management programs and cutbacks
in operating expenses in all parts of the business. Management also broadened
its sales and marketing emphasis to target large retailers and national public
service organizations rather than individual healthcare professionals.
Management believes these actions will improve operating performance and cash
flow in the near term.
For the past several years the Company has financed its operations primarily
through private sales of securities and revenues from the sale of its products.
Since June of 1993 the company has received net proceeds of approximately $10.0
million from the private sale of securities and debt. The Company may raise
additional capital through private and/or public sales of securities in the
future.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March, 1997, the Company was sued by Lehman Millet Incorporated ("LMI") in
Suffolk County Superior Court in Boston, Massachusetts concerning an alleged
agreement to provide public relations and promotional assistance with respect to
the MTI PhotoScreener(TM). The suit alleges that monies are owed by the Company
to LMI for services provided. The Company answered the complaint and vigorously
contests the claims, and has asserted counterclaims for breach of contract and
deceit alleging damages, including lost revenues as a result of LMI's failure to
provide the appropriate professional services as represented. The lawsuit is
presently in the discovery phase and the parties anticipate attempting to
resolve this matter by mediation within the next several months.
On November 24, 1997, the Company filed suit against Faisal Finance
(Switzerland) SA in the United States District Court, Eastern District of
Pennsylvania, Case No. 97-CV-7191. The suit alleges that Faisal breached its
contract with the Company with respect to the Company's restructuring of the
Company's Series A Preferred Stock Regulation S offering. The complaint also
alleges that Faisal engaged in a scheme to defraud the Company and requests that
the court award it, as of this date, an unspecified amount of damages. Prior to
the filing of the complaint Faisal demanded conversion of its Series A stock.
The Company has refused to agree to that request. In response thereto, Faisal
filed suit against the Company in the United States District Court, Southern
District of Florida, Case No. 97-3813 for Breach of Contract and Quantum Meruit
in regard to the same transaction and seeks damages in excess of $50,000 and
that the Company be required to convert Faisal's preferred stock. It is
anticipated that these actions will be consolidated into one case in Florida.
With respect to the suit filed by Faisal, the Company believes that the suit is
without merit and the Company will vigorously defend this action.
MTI, the Company and Steridyne are also parties to other pending legal
proceedings in the ordinary course of their business. The Company does not
expect these legal proceedings to have a material adverse effect on the
Company's financial condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
3.1 Amendment to the Articles of Incorporation for SouthStar Productions,
Inc., which changed its name to Medical Technology & Innovations, Inc.
[Incorporated by reference to the Company's Current Report on Form 8-K
for an event on September 21, 1995]
3.2 Restated Articles of Incorporation for Medical Technology &
Innovations, Inc.[Incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed
September 30, 1996]
3.3 By-laws [Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-18 (File No. 33-27610-A), filed March
17, 1989]
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
<TABLE>
<S> <C> <C>
AND
BY: BY:
/S/ DENNIS A. SUROVCIK /s/ ROBERT D. BRENNAN
------------------------------------------ -------------------------------------
Dennis A. Surovcik, Senior Vice President Robert D. Brennan, President
Chief Financial Officer Chief Operating Officer
</TABLE>
Date: February 15, 1998.
11
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 196,923
<SECURITIES> 0
<RECEIVABLES> 577,166
<ALLOWANCES> 36,367
<INVENTORY> 621,549
<CURRENT-ASSETS> 1,387,581
<PP&E> 1,567,366
<DEPRECIATION> 292,129
<TOTAL-ASSETS> 5,266,704
<CURRENT-LIABILITIES> 1,887,551
<BONDS> 0
0
1,602,000
<COMMON> 9,310,170
<OTHER-SE> (309,742)
<TOTAL-LIABILITY-AND-EQUITY> 5,266,704
<SALES> 2,410,000
<TOTAL-REVENUES> 2,410,000
<CGS> 1,650,153
<TOTAL-COSTS> 1,324,616
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125,316
<INCOME-PRETAX> (690,105)
<INCOME-TAX> 0
<INCOME-CONTINUING> (690,105)
<DISCONTINUED> 0
<EXTRAORDINARY> 948,163
<CHANGES> 0
<NET-INCOME> 258,058
<EPS-PRIMARY> .014
<EPS-DILUTED> 0
</TABLE>
