<TABLE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 30, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission file number 0-17973
MEDCROSS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2291344
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3227 Bennet Street North, St. Petersburg, Florida 33713
(Address of principal executive offices)
(813) 521-1793
(Issuer's telephone number)
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 issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest
practicable date.
Class Outstanding at July 30, 1995
Common Stock, par value $0.007 1,749,163
Traditional Small Business Disclosure Format (Check One): Yes No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<CAPTION>
Assets
June 30
1995
<S> <C>
Current assets
Cash and cash equivalents $ 270,084
Accounts receivable less allowance of $773,958 913,727
Inventory 799,849
Prepaid expenses 63,764
Total current assets 2,047,424
Property and equipment 3,386,165
Less accumulated depreciation 1,584,319
Net property and equipment 1,801,846
Investment in unconsolidated subsidiary 7,500
Intangible assets, net of amortization of $203,386 583,176
Other assets 67,901
Total assets $ 4,507,847
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 522,853
Advance deposits received 192,093
Reserve for warranty liability 87,119
Note payable - related party 218,000
Note payable - other 450,000
Current portion of long-term debt 206,220
Current obligations under capital lease 258,643
Total current liabilities 1,934,928
Long-term debt 600,380
Obligations under capital leases 22,702
Minority equity interest in consolidated subsidiaries 393,260
Commitments and contingencies -
Stockholders' equity
Preferred stock 2,075,000
Common stock 12,244
Other stockholders' deficit ( 530,667)
Total stockholders' equity 1,556,577
Total liabilities and stockholders' equity $ 4,507,847
<CAPTION>
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net operating revenue $ 758,359 $ 895,910 $ 1,875,852 $ 1,828,280
Cost of goods sold - equipment sales and service 54,641 - 239,798 -
Salaries and benefits 311,487 316,049 640,418 609,052
Repairs and maintenance 77,542 82,094 154,488 162,131
Provision for doubtful accounts ( 3,943) 20,282 323,645 56,372
Depreciation and amortization 116,741 125,290 234,693 245,967
Other operating expenses 297,748 276,668 614,536 603,446
Operating profit (loss) ( 95,857) 75,527 ( 331,726) 151,312
Interest expense 41,692 43,724 80,820 86,178
Other income ( 19,583) ( 9,110) ( 23,399) ( 17,517)
Equity in net income of unconsolidated subsidiary - 18,664 - 13,305
Income (loss) before minority interest in net income
(loss) of consolidated subsidiaries and income
tax provision ( 117,966) 22,249 ( 389,147) 69,346
Minority interest in net income (loss) of consolidated
subsidiaries ( 20,623) 15,363 ( 7,844) 38,517
Income (loss) before income tax provision ( 97,343) 6,886 ( 381,303) 30,829
Income tax provision - 2,699 - 5,186
Net income (loss) $( 97,343) $ 4,187 $( 381,303) $ 25,643
Earnings (loss) per common share $( .01) $ - $( .06)$ -
Weighted average common and equivalent shares
outstanding 6,831,194 6,927,327 6,857,838 6,941,093
<CAPTION>
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30
1995 1994
<S> <C> <C>
Cash provided by operating activities $ 155,982 $ 57,006
Cash flows from investing activities
Purchase of property and equipment ( 15,375) ( 39,506)
Proceeds from sale of property and equipment 4,500 75
Investment in unconsolidated subsidiary - ( 3,750)
Net cash used by investing activities ( 10,875) ( 43,181)
Cash flows from financing activities
Proceeds of note payable - related party 218,000 -
Proceeds (reduction) of note payable - other (101,000) 211,000
Reduction of long-term debt (194,571) ( 194,571)
Reduction of capital lease obligations (120,251) ( 109,182)
Additional paid-in capital - 260,417
Minority interest distributions ( 36,500) ( 20,867)
Net cash provided (used) by
financing activities (234,322) 146,797
Effect of foreign currency translation on cash flows ( 1,858) ( 86,941)
Increase (decrease) in cash and cash equivalents ( 91,073) 73,681
Cash and cash equivalents at beginning of period 361,157 1,176,757
Cash and cash equivalents at end of period $ 270,084 $ 1,250,438
<CAPTION>
Supplemental cash flow information
In February 1995 a holder of Class B Preferred Stock converted 9,350 shares into 227,714 shares of Common
Stock.
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
MEDCROSS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statements
In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for
a fair statement of (a) the results of operations for the three-month and six-month periods ended June 30, 1995
and June 30, 1994, (b) the financial position at June 30, 1995, and (c) cash flows for the six-month periods ended
June 30, 1995 and June 30, 1994, have been made.
The unaudited consolidated financial statements and notes are presented as permitted by Form 10-QSB.
Accordingly, certain information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted. The accompanying consolidated
financial statements and notes should be read in conjunction with the audited financial statements and notes of
the Company for the fiscal year ended December 31, 1994. The results of operations for the six-month period
ended June 30, 1995 are not necessarily indicative of those to be expected for the entire year.
Note 2 - Related Party Transactions
The Company received advances from Mortgage Network International. The Company issued a promissory note
bearing interest at one percent over the prime rate at Southwest Bank of Texas, N.A. with maturity of October
31, 1995. The Company's Vice Chairman/President has management control over Mortgage Network
International.
Note 3 -Earnings Per Common Share
Earnings per common share are based upon the weighted average number of common shares outstanding and
the dilutive effect of common stock equivalents consisting of stock options and convertible preferred stock. Fully
diluted earnings per share are not presented because it approximates earnings per common share.
Note 4 - Geographic Segment Information
The Company's operations consist of providing diagnostic and clinical outpatient health care services domestically
and the sale and service of used medical equipment in the People's Republic of China (PRC). The corporate
office provides management and operational services for domestic outpatient health care services. The
eliminations represent charges for these services to entities included in the consolidation. Financial information
for the different geographic segments is as follows:
Six Months Ended Corporate/
June 30, 1995 Domestic China Management Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Revenue $ 1,373,862 $ 337,889 $ 245,315 $( 81,214) $ 1,875,852
Operating Profit (Loss) $ 237,130 $( 242,151) $( 245,491) $( 81,214) $( 331,726)
Identifiable Assets $ 3,340,780 $ 1,089,569 $ 220,668 $( 143,170) $ 4,507,847
<CAPTION>
<PAGE>
Six Months Ended Corporate/
June 30, 1994 Domestic China Management Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Revenue $ 1,528,991 $ - $ 355,427 $( 56,138) $ 1,828,280
Operating Profit (Loss) $ 516,321 $( 95,776) $( 213,105) $( 56,138) $ 151,312
Identifiable Assets $ 3,991,714 $ 905,332 $ 1,095,681 $( 10,396) $ 5,982,331
<CAPTION>
Item 2 - Management's Discussion and Analysis
The following discussion should be read in conjunction with the information contained in the financial statements
of the Company and the notes thereto appearing elsewhere herein and in conjunction with Management's
Discussion and Analysis set forth in the Company's Form 10-KSB for the fiscal year ended December 31, 1994.
Results of Operations
The following Table represents the net operating revenue and operating profit (loss) of the Company for each
category of service offered. The net operating revenue and operating profit (loss) shown are net of
intercompany transactions that were eliminated in consolidation.
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET OPERATING REVENUE
Diagnostic Imaging $ 677,044 $ 746,430 $ 1,373,862 $ 1,582,991
Sales and Service of Medical
Equipment - - 337,889 -
Management and Other 81,315 149,480 164,101 299,289
$ 758,359 $ 859,910 $ 1,875,852 $ 1,828,280
OPERATING PROFIT (LOSS)
Diagnostic Imaging $ 90,945 $ 252,957 $ 237,130 $ 516,321
Sales and Service of Medical
Equipment ( 31,164) ( 54,236) ( 242,151) ( 95,766)
Management and Other ( 155,638) ( 123,194) ( 326,705) ( 269,243)
$( 95,857) $ 75,527 $( 331,726) $ 151,312
<CAPTION>
Diagnostic Imaging
Net operating revenue from diagnostic imaging services for the three-month and six-month periods ending June
30, 1995 decreased 9% and 10%, respectively, as compared to the same periods in 1994. MRI revenue of Tampa
MRI decreased $56,538 (17%) for the three months ended June 30, 1995 and $184,187 (25%) for the six months
ended June 30, 1995. This was a result of a decrease in the number of MRI procedures performed for the three-
month and six-month periods ended June 30, 1995 of 18% and 26%, respectively, as compared to the same
periods in the prior year. Tampa MRI has been successful in obtaining several managed care contracts. The
Company's marketing activities have resulted in a 19% increase in the number of cases performed from the first
quarter of 1995. Tampa MRI is continuing to pursue additional managed care contracts. Obtaining managed
care contracts will cause the average revenue per case to decline, which should be offset by an increase in the
number of procedures performed. MRI revenue of Medcross Imaging, Ltd. decreased by $98,875 (24%) and
<PAGE>
$163,039 (27%), for the three-month and six-month periods ended June 30, 1995, respectively, as compared to
the same periods in 1994. This was a result of a decrease in number of patients treated of 26% for the three-
month and 20% for the six-month periods ended June 30, 1995 as compared to the same periods in 1994 and
was caused by increased competition in the area. A mobile MRI company began providing service to a local
hospital in the first quarter of 1995. The hospital closed in June 1995 and the mobile company opened an MRI
center in St. Petersburg, Florida which creates direct competition for Medcross Imaging, Ltd. Urological
Ultrasound Services of Tampa Bay (UUSTB) was acquired and included in the consolidated financial statements
of the Company effective October 1, 1994. On May 1, 1995, the Company transferred its ultrasound operations
to Tampa MRI. Ultrasound revenue for the three-month and six-month periods ended June 30, 1995 were
$86,027 and $192,097, respectively. Ultrasound revenue increased 31% and 14% for the three-month and six-
month periods of June 30, 1995, respectively, as compared to revenue of the unconsolidated joint venture for the
same periods in 1994. The number of procedures increased 32% for the three-month period ended June 30,
1995 and 26% for the six-month period ended June 30, 1995 as compared to corresponding periods of the prior
year.
The operating profit from diagnostic imaging services decreased $128,179 and $279,191 for the three-month and
six-month periods ended June 30, 1995, respectively, as compared to the same periods of the prior year. These
decreases were caused by a decline in operating profit from MRI services of $179,673 and $346,808 for the three-
month and six-month periods ended June 30, 1995, respectively, compared to the three-month and six-month
periods ended June 30, 1994. These declines were offset by a $17,661 and $67,617 operating profit from
ultrasound services for the three-month and six-month periods ended June 30, 1995. The decline in MRI
operating profit for the three-month and six-month periods ended June 30, 1995 was a result of the decrease in
MRI revenue and increase in the provision for doubtful accounts.
During the past several years, there has been increasing pressure from federal and state regulatory and legislative
bodies to prevent physicians from referring patients to diagnostic imaging facilities in which they have an
ownership interest. Legislation passed in the State of Florida, where all of the Company's diagnostic imaging
services operate, placed a fee cap on diagnostic imaging services. An injunction has been obtained preventing
the State of Florida from enforcing the fee cap. See "Item 3. Legal Proceedings" in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1994. The State of Florida is seeking a review of that
on appeal and there can be no assurances as to the outcome of such appeal.
Sales and Service of Medical Equipment
The Company sells and services used and refurbished computerized tomography (CT) scanners in the People's
Republic of China through its own office in Beijing and a joint venture company, Shenyang Medcross Huamei
Medical Equipment Company, Ltd. (SMHME), of which it owns 51%. During the last four months of 1994, the
Beijing office completed the installation of two CT scanners and SMHME completed the installation of one CT
scanner. In the first quarter 1995, the Company's Beijing office completed the installation of two additional CT
scanners. On May 31, 1995, the Beijing office was closed and the responsibilities for the parts depot and the
remaining inventory have been transferred to SMHME. Various issues have been raised by the purchasers in
China regarding maintenance of the scanners, parts depot, etc. The Company's President, Henry Toh, personally
traveled to China to resolve these issues and obtain payment. The Company received a $100,000 payment in
June 1995, and Mr. Toh is confident that the issues will be resolved and payment received by the end of the third
quarter of 1995. However, the Company has elected to fully reserve for all amounts due to the Beijing office
for the four scanners installed. This resulted in an expense of $189,214 in the first six months of 1995 and
$188,842 in the fourth quarter of 1994 and an allowance for doubtful accounts of $378,056 as of June 30, 1995.
In June 1995, the Company has written down one of the CT scanners in inventory to what management believes
is fair market value. This resulted in $49,122 of additional cost of goods sold. The Company has held
preliminary discussions regarding the sale of the China operations. Nevertheless, the Company has not received
any definitive offers at this time and there can be no assurance that such operations will be sold.
<PAGE>
Management and Other
Net operating revenue from management and other activities decreased by $68,165 and $135,188 in the three-
month and six-month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The
decrease was primarily related to the management contracts with Bay Area Renal Stone Center (BARSC) and
UUSTB. The BARSC contract accounted for $36,684 and $72,959 for the three-month and six-month periods
ended June 30, 1995, respectively. The UUSTB contract accounted for $24,994 and $51,490 in the three-month
and six-month periods ended June 30, 1994, respectively. Since UUSTB became a wholly owned subsidiary in
October 1994, management and billing fees have been eliminated in consolidation.
The net operating loss from management and other activities increased by $32,444 and $57,462 in the three-
month and six-month periods ended June 30, 1995, respectively, as compared to the same periods in 1994. This
increased loss was related to the decrease in revenues from management and other activities, offset by a decrease
in corporate expense of $35,591 and $77,726 in the three-month and six-month periods ended June 30, 1995 as
compared to the same periods in 1994.
Corporate expenses will be reduced in the third and fourth quarters of 1995 due to the resignation of the Vice
President of Acquisitions, Bijan Taghavi, effective July 26, 1995 and the resignation of the Senior Vice
President/CFO, Timothy R. Barnes, effective August 6, 1995. These positions will not be replaced at this time.
The Company has actively begun pursuit of imaging centers in the United States and will use outside third party
consultants in its efforts to expand its ownership and operation of MRI facilities.
Consolidated Operating Results
Net operating revenue of the Company decreased 15% for the three-month period ended June 30, 1995 as
compared to the same period in 1994. The decrease is a result of the decline in management fee revenue and
revenue from MRI services, offset by the inclusion of ultrasound revenues. The cost of goods sold in the second
quarter was mainly related to the writedown of CT scanner inventory to fair market value. The decrease in
salaries and benefits was due to a decrease in the corporate office, offset by an increase in diagnostic imaging
(due to the inclusion of UUSTB) and China operations. The provision for doubtful accounts decreased
significantly due to the collection of receivables from China clients, which were reserved at 100%. The increases
in the China operations and ultrasound services were offset by the reduction of other operating expenses in the
corporate office. The decline in operating profit was the culmination of the decline in operating profit from
diagnostic imaging and the corporate office, offset by an increase in operating profit for China operations.
Net operating revenue of the Company increased by 3% in the first six months of 1995 as compared to the same
period of 1994. This increase was the result of new sources of revenue from the sale and service of medical
equipment in China and the acquisition of UUSTB. The increase in revenue from these new sources was offset
by the decline in management fee revenue and revenue from MRI services. The cost of goods sold was related
to the sale and service of CT equipment in China and the write-down of inventory to fair market value. While
the cost of the first two CT scanners sold in 1994 was greater than revenue, there was a significant gross margin
on the two scanners installed in the first quarter of 1995. This increase in the gross margin was due to
efficiencies gained through the Company's prior experience in purchasing, refurbishing, shipping, and installing
the equipment in China. The increase in salaries and benefits was primarily related to the inclusion of UUSTB
in the consolidation. The large increase in the provision for doubtful accounts was a result of recording a reserve
for receivables from China clients, as previously discussed. The reductions of other operating expenses in the
corporate office and Tampa MRI were offset by increases in other operating expenses in the China operations
and UUSTB. The overall decline in operating profit was the culmination of the decline in operating profit from
diagnostic imaging services, foreign operations, and the corporate office.
Liquidity and Capital Resources
Working capital provided by operations during the first six months of 1995 was $173,212, compared to $351,455
in 1994. The working capital decreased mainly due to the decline of net income. The working capital position
of the Company declined by $350,136 during the six-month period ended June 30, 1995. Working capital position
<PAGE>
of the Company was $112,496 at June 30, 1995 and $462,632 at December 31, 1994. Cash flow provided by
operating activities was $155,982 in the first six months of 1995 compared to $57,006 in the same period in 1994.
This was mainly due to the collection of $100,000 from China receivables.
Investing activities expenditures during the first six months of 1995 related to the purchase of additional
equipment for the Tampa MRI unit.
During the six months of 1995, the Company reduced its long term debt and capital lease obligations by $314,822
and the outstanding balance of its line of credit by $101,000. The Company was in violation of loan covenants
regarding cash balances, consolidated equity, debt to equity ratios, and cash flow coverage ratios, under the line
of credit at June 30, 1995. The bank has waived those covenant violations. During the first quarter of 1995, the
Company received advances totaling $218,000 from Mortgage Network International, payable on demand. The
Company's Vice Chairman/President has management control over Mortgage Network International. The
advances were subsequently formalized by the Company issuing a promissory note bearing interest at one percent
over the prime rate of Southwest Bank of Texas, N.A. with a maturity of October 1, 1995. The $260,417 minority
interest contribution during the first quarter of 1994 represents a contribution made by the Company's joint
venture partner in SMHME. The joint venture agreement requires that capital contributions and distributions
of capital are exchanged at a rate of 5.76 Renminbi per U.S. Dollar. The actual exchange rate at the time the
contributions were made was in excess of 8.5 Renminbi per U.S. Dollar. The effects of foreign currencies on
cash flows in 1994 is almost entirely related to the difference between the stipulated exchange rate in the joint
venture agreement and the actual exchange rate at the time the contributions were made.
Capital requirements of the Company for 1995 consist primarily of funding ongoing operations, repayment of
Mortgage Network International advances, and the reduction of the outstanding balance of the Company's line
of credit with First Union National Bank of Florida. The Company has no material commitments for capital
expenditures other than for ordinary expenses incurred during the usual course of business. To the extent that
the Company is unable to collect the receivables from China operations, the Company will need to reduce future
expenses or raise additional capital to meet its operating cash flow requirements. Additional investment in the
Company's China or domestic operations will require that the Company raise additional capital through public
or private debt or equity financing. The availability of these capital sources will depend upon prevailing market
conditions, interest rates and the then existing financial position and results of operations of the Company.
Therefore, no assurances can be made by the Company that such additional capital will be available.
PART II - OTHER INFORMATION
Item 5 - Other Information
Timothy R. Barnes the Senior Vice President/CFO, Secretary/Treasurer of the Company has resigned his
position, effective August 6, 1995, to pursue other opportunities.
Bijan Taghavi the Vice President of Acquisitions and a Director of the Company has resigned his position,
effective July 26, 1995, to pursue other opportunities.
Item 6(a) - Exhibits
11 Statement regarding computation of earnings per common share.
Item 6(b) - Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunder duly authorized.
MEDCROSS, INC.
(Registrant)
Date: August 14, 1995 By: /s/ HENRY TOH
Henry Toh
President
(Acting Principal Financial Officer &
Acting Principal Accounting Officer)
<S> <S>
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Earnings per common and common equivalent share
Net income (loss) available to common
and equivalent shares $( 97,343) $ 4,187 $( 381,303) $ 25,643
Weighted average common shares
outstanding 1,749,163 1,503,305 1,690,970 1,503,305
Adjustments
Assumed issuance of shares purchased
under stock option and stock purchase
plans 4,026 92,580 5,669 103,680
Assumed exercise of warrants - 8,713 25,000 11,380
Assumed conversion of:
Class A Variable Rate Cumulative
Convertible Preferred Stock 4,894,463 4,894,463 4,894,463 4,894,463
Class B Variable Rate Cumulative
Convertible Preferred Stock 183,542 428,265 241,736 428,265
Total common and equivalent shares 6,831,194 6,927,326 6,857,838 6,941,093
Earnings (loss) per common and
equivalent share $( .01) $ - $( .06)$ -
Fully diluted earnings per common and common equivalent share
Net income (loss) available to common
and equivalent share $( 97,343) $ 4,187 $( 381,303) $ 25,643
Weighted average common shares
outstanding 1,749,163 1,503,305 1,690,970 1,503,305
Adjustments
Assumed issuance of shares purchased
under stock option and stock purchase
plans 4,409 92,580 5,861 103,680
Assumed exercise of warrants - 8,713 25,000 11,380
Assumed conversion of:
Class A Variable Rate Cumulative
Convertible Preferred Stock 4,894,463 4,894,463 4,894,463 4,894,463
Class B Variable Rate Cumulative
Convertible Preferred Stock 183,542 428,265 241,736 428,265
Total common and equivalent shares 6,831,577 6,927,326 6,858,030 6,941,093
Earnings (loss) per common and
equivalent share $( .01) $ - $( .06)$ -
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MEDCROSS, INC AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY'S FORM 10-QSB FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 270084
<SECURITIES> 0
<RECEIVABLES> 1687685
<ALLOWANCES> 773958
<INVENTORY> 799849
<CURRENT-ASSETS> 2047424
<PP&E> 3386165
<DEPRECIATION> 1584319
<TOTAL-ASSETS> 4507847
<CURRENT-LIABILITIES> 1934928
<BONDS> 0
<COMMON> 12244
0
2075000
<OTHER-SE> (530667)
<TOTAL-LIABILITY-AND-EQUITY> 4507847
<SALES> 337889
<TOTAL-REVENUES> 1875852
<CGS> 239798
<TOTAL-COSTS> 239798
<OTHER-EXPENSES> 1644135
<LOSS-PROVISION> 323645
<INTEREST-EXPENSE> 80820
<INCOME-PRETAX> (381303)
<INCOME-TAX> 0
<INCOME-CONTINUING> (381303)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (381303)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
