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 June 30, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ___________
Commission File Number 0-26284
-------
MILESTONE SCIENTIFIC INC.
-------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3545623
----------------------------------------------------------------
State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
220 South Orange Avenue, Livingston, New Jersey 07039
-----------------------------------------------------
(Address of principal executive office) (Zip Code)
(201) 535-2717
--------------
(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 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 July 31, 1997 the Registrant had a total of 5,568,152 shares of
Common Stock, $.001 par value, outstanding.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets (unaudited)
at June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations
(unaudited) for the six and three months
ended June 30, 1997 and 1996 4
Consolidated Statements of Changes in
Stockholders' Equity for the six
months ended June 30, 1997 (unaudited)
and the year ended December 31, 1996 5
Consolidated Statements of Cash Flows
(unaudited) for the six months ended
June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
SIGNATURES
2
<PAGE>
Milestone Scientific Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
ASSETS
(unaudited)
June 30 December 31
1997 1996
CURRENT ASSETS
Cash and cash equivalents $ 2,415,633 $ 779,359
Accounts receivable 559,685 323,746
Inventories 560,929 508,727
Prepaid expenses 68,822 20,788
----------- -----------
Total current assets 3,605,069 1,632,620
Property and equipment, net 495,673 281,378
Patents, net 1,975,244 2,039,816
Deferred financing costs -- 635,000
Other assets 32,618 68,132
----------- -----------
Total assets $ 6,108,604 $ 4,656,946
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit - bank $ 250,000 $ 75,000
Accounts payable 728,132 483,537
Accrued expenses 93,278 102,310
Deferred revenue -- 38,517
----------- -----------
Total current liabilities 1,071,410 699,364
=========== ===========
STOCKHOLDERS' EQUITY
Common stock, par value $.001;
Authorized, 10,000,000 shares;
issued and outstanding, 5,563,630
shares at June 30, 1997 5,563 4,633
Additional paid-in capital 9,631,882 6,819,341
Deficit (4,600,251) (2,736,352)
Unearned compensation -- (130,040)
----------- -----------
Total stockholders' equity 5,037,194 3,957,582
----------- -----------
Total liabilities and stockholders' equity $ 6,108,604 $ 4,656,946
=========== ===========
See notes to consolidated financial statements
3
<PAGE>
Milestone Scientific Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the six and three months ended June 30,
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 1,634,564 $ 107,385 $ 871,841 $ 33,027
Cost of Sales 1,006,401 73,028 535,228 20,502
----------- ----------- ----------- -----------
Gross Profit 628,163 34,357 336,613 12,525
----------- ----------- ----------- -----------
Selling, general and
administrative expenses 2,253,506 840,259 1,324,788 424,070
Research and development expenses 273,721 63,773 208,668 25,975
----------- ----------- ----------- -----------
2,527,227 904,032 1,533,456 450,045
----------- ----------- ----------- -----------
Loss from operations (1,899,064) (869,675) (1,196,843) (437,520)
----------- ----------- ----------- -----------
Other income and expense
Interest income (net) 32,565 42,711 28,972 18,997
Other income (net) 2,600 72,926 -- 65,000
Minority interest in net
loss of subsidiary -- 106,246 -- 39,173
----------- ----------- ----------- -----------
35,165 221,883 28,972 123,170
=========== =========== =========== ===========
NET LOSS $(1,863,899) $ (647,792) $(1,167,871) $ (314,350)
=========== =========== =========== ===========
Loss per share $ (0.36) $ (0.14) $ (0.21) $ (0.07)
=========== =========== =========== ===========
Weighted average shares outstanding 5,202,074 4,503,000 5,563,630 4,550,000
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
Milestone Scientific Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the year ended December 31, 1996 and
the six months ended June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Additional
paid-in Unearned
Common Stock capital Deficit compensation Total
------------ ------- ------- ------------ -----
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 4,480,000 $4,480 $5,690,895 $ (786,824) $(390,040) $ 4,518,511
Shares issued in connection with
the business combinations
accounted for as purchases 23,350 23 111,076 111,099
Shares issued to Consultants 130,000 130 382,370 382,500
Compensation expense 260,000 260,000
Warrants issued to placement agent 635,000 635,000
Net loss for the year ended
December 31, 1996 (1,949,528) (1,949,528)
--------- ------ ---------- ----------- --------- -----------
Balance, December 31, 1996 4,633,350 4,633 6,819,341 (2,736,352) (130,040) 3,957,582
Private Placement of Units 852,262 852 2,317,975 2,318,827
Compensation expense 130,040 130,040
Shares Issued For Capital Assets 12,000 12 80,238 80,250
Shares issued to Consultants 58,000 58 369,692 369,750
Shares issued in connection
with conversion offer to
minority Shareholders of Spintech 8,018 8 44,636 44,644
Net loss for the six months
ended June 30, 1997 (1,863,899) (1,863,899)
--------- ------ ---------- ----------- --------- -----------
Balance, June 30, 1997 5,563,630 $5,563 $9,631,882 ($4,600,251) $ -0- $ 5,037,194
========= ====== ========== =========== ========= ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
Milestone Scientific Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(unaudited)
1997 1996
---- ----
Cash flows from operating activities
Net loss $(1,863,899) $ (647,792)
Adjustments to reconcile net loss to
net cash used in operating activities
Amortization of excess of purchase
price over tangible net assets 114,609 114,772
Amortization and depreciation 28,287 1,894
Loss applicable to minority interest -- (91,346)
Compensation expense 130,040 130,000
Changes in assets and liabilities
(Increase) in accounts receivable (235,939) (3,049)
(Increase) in inventories (52,202) (12,400)
(Increase) in prepaid expenses (48,034) (20,706)
(Increase) in other assets (1,919) (3,138)
Increase (Decrease) in accounts payable 244,594 (8,386)
(Decrease) in accrued expenses (9,032) (18,896)
(Decrease) in Deferred Revenue (38,517) --
----------- -----------
Net cash used in operating activities (1,732,012) (559,047)
----------- -----------
Cash flows from investing activities
Capital expenditures (162,332) (102,477)
Acquisition costs of minority interest in Spintech (5,392) --
----------- -----------
Net cash used in investing activities (167,724) (102,477)
----------- -----------
Cash flows from financing activities
Net proceeds from private placement 3,361,010 --
Proceeds from issuance of Debt 175,000 --
----------- -----------
Net cash provided by financing activities $ 3,536,010 --
----------- -----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS 1,636,274 (661,524)
Cash and cash equivalents at beginning of Period 779,359 2,331,639
----------- -----------
Cash and cash equivalents at end of Period $ 2,415,633 $ 1,670,115
=========== ===========
See notes to consolidated financial statements
6
<PAGE>
Milestone Scientific Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
For the six months ended June 30,
(unaudited)
1997 1996
---- ----
Supplemental disclosures of cash flow information:
Cash paid during the period for
Income taxes $ -- $ --
----------- -----------
Interest $ 12,799 $ --
----------- -----------
In 1997, 54,000 shares of common stock were issued for services performed
associated with the 1997 private placement. The value of the above shares,
deferred financing and other costs incurred in 1996 were applied against the net
proceeds in 1997.
In 1997, 12,000 shares of common stock were issued in exchange for capital
assets.
In 1997, 8,018 shares of common stock were issued in exchange for approximately
525 shares of Spintech common stock (approximately 1%). The value of the stock
and associated legal costs at date of acquisition is shown in patents.
See notes to consolidated financial statements.
7
<PAGE>
Milestone Scientific Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The unaudited interim financial statements of Milestone Scientific Inc.
and Subsidiaries (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring
entries) necessary to present fairly the financial position as of June 30,
1997, and the results of operations, changes in stockholders' equity and
cash flows for the six-month periods ended June 30, 1997 and 1996,
respectively.
The results reported for the six-month period ended June 30, 1997 are not
necessarily indicative of the results of operations which may be expected
for a full year.
NOTE 2 - ACQUISITIONS
PRINCETON PMC
In March 1996, the Company, entered into a shareholder's agreement to form
Princeton PMC, a corporation, to engage in the marketing and sale of
dental products. The Company contributed $85,000 for 200 shares of this
entity representing a two-thirds ownership. Only the June 30, 1997
Consolidated Financial Statements include the six month operating results
of Princeton PMC.
In November 1996, the Company purchased the remaining one-third of
Princeton PMC's outstanding stock for 100 shares of its common stock. The
acquisition has been recorded using the purchase method of accounting. The
purchase price approximated the net tangible assets acquired.
In connection with the acquisition of Princeton PMC, additional shares of
common stock could be issued depending upon the Company's average earnings
over the next two years as defined. The Company is obligated to issue
159,900 shares of its common stock if certain income levels are achieved.
The fair value of the common stock would be classified as compensation
expense charged to the statement of operations.
8
<PAGE>
Milestone Scientific Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 2 - ACQUISITIONS (continued)
WISDOM
In December 1996, the Company completed the purchase of Wisdom's
outstanding stock by issuing 23,250 shares of its common stock valued at
$110,437. The acquisition has been recorded using the purchase method of
accounting. The cost was less than the subsidiary's net assets at the date
of acquisition. The excess of net assets over cost has been applied to
reduce the amounts assigned to noncurrent assets of the subsidiary. Only
the June 30, 1997 Consolidated Financial Statements include the operating
results of Wisdom.
SPINTECH
In November 1995, the Company completed the purchase of 65% of Spintech's
outstanding stock on a fully diluted basis for $2,700,000. The Company
paid $2,026,495, which represents the $2,700,000 less amounts advanced to
Spintech amounting to $632,500 plus interest of $41,005. The acquisition
has been recorded using the purchase method of accounting. The excess of
the aggregate purchase price over the net tangible assets acquired was
allocated to patents and is being amortized over ten years. The operating
results of Spintech have been included in the Company's consolidated
financial statements since the date of acquisition. The minority interest
has been valued at zero as of June 30, 1997.
The Company also holds a series of annual options to purchase, for a
nominal amount, an additional 3% of Spintech's outstanding shares
following each of the first five fiscal years commencing after the closing
of the stock purchase (or an aggregate of 15% of such shares if all of the
options are exercised). Each option is exercisable only if Spintech does
not achieve a specified pretax profit target as defined in the applicable
fiscal year. As a result of Spintech not achieving the specified pretax
profit in 1996, the Company exercised their option in 1997.
In January 1997, the company offered to minority shareholders of Spintech
to exchange 1 Spintech share for 15.27 shares of Milestone. This offer is
for restricted shares. As of June 30, 1997, 525 shares of Spintech were
converted, which together with the above exercise increased Milestone's
ownership of Spintech to 69%. The value of the converted shares and
associated legal costs are shown in patents, as a result of the value
being in excess of the tangible net assets of Spintech.
9
<PAGE>
Milestone Scientific Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 3 - PRIVATE PLACEMENT
In March 1997, the company sold, in a private placement, an aggregate of
852,262 units at $4.72 per unit for net cash proceeds of $3,361,010, less
non cash costs for shares issued in connection with the private placement
of $1,042,183 for a net amount of $2,318,827. Each unit consisted of one
share of common stock and one common stock purchase warrant. Each warrant
entitles the holder to purchase one share of common stock for three years
from the closing of the offering at an exercise price of $4.72 per share.
In addition, the placement agent received warrants to purchase 85,226
units at $4.72 per unit.
NOTE 4 - LITIGATION
On March 26, 1997, Milestone and Spintech commenced legal action in the
United States District court of New Jersey against Ronald Spinello, DDS,
Chairman and Director of Research of Spintech. In the complaint,
plaintiffs seek recovery of compensatory and punitive damages in excess of
$4,000,000 for extortion and tortious interference with existing and
prospective contract and business relationships, a declaratory judgment
that Dr. Spinello has no personal rights to certain technology developed
while he was employed as Director of Research of Spintech relating to the
design and production of ancillary components of its computer controlled
local anesthetic delivery system, a declaratory judgment that plaintiffs
have not breached Dr. Spinello's employment agreement or the agreement for
the initial purchase by Milestone of a 65% equity interest in Spintech and
injunctive relief. On May 21, 1997, Dr. Spinello filed an answer and
counterclaim which denies the material allegations of the complaint and
seeks recovery for breach of the defendant's employment agreement,
initiates a derivative action against Milestone with respect to various
expenditures and actions for which Defendant, on behalf of Spintech, seeks
an amount in excess of $75,000, alleges civil conspiracy against Milestone
with respect to certain of those matters and the entry into the employment
agreement with Defendant and seeks indemnification for expenses, including
attorneys fees, in the pending action. On May 25, 1997 the Company filed a
reply to counterclaims which denied all of the material allegations of the
counterclaims. Milestone has been advised by its patent counsel that all
technology developed by Dr. Spinello while employed by Spintech is owned
by Spintech. The Company believes that ownership of the technology
relating to these ancillary components which are the subject of this
litigation in no way prevents the manufacture and sale of its anesthetic
delivery system at economically viable prices.
10
<PAGE>
Milestone Scientific Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 4 - LITIGATION (continued)
On May 20, 1997, Glenn R. Spinello filed a Complaint in the Court of
Common Pleas, York County, Pennsylvania seeking damages as a result of the
alleged breach of his Employment Agreement. On June 20, 1997, the company
and Spintech filed a notice of Removal which transferred venue of Glenn
Spinello's lawsuit to the United States District Court for the Middle
District of Pennsylvania. On June 27, 1997, the Company and Spintech filed
an Answer to Glenn Spinello's Complaint which denied the material
allegations of the Complaint and asserted counterclaims based upon Glenn
Spinello's breach of his Employment Agreement.
11
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operation
In March 1997, the company consummated a private placement (the "Private
Placement") of 852,262 units, each consisting of one share of Common Stock and
one Common Stock Purchase Warrant exercisable at $4.72 per share through a
placement agent. The company received gross proceeds of $4,022,500 in the
Private Placement. The Private Placement was over subscribed and the company
accepted subscriptions for more than the maximum number of units offered.
Three Months Ended June 30, 1997 as compared to the Three Months Ended
June 30, 1996
Statement of Operations
Revenues and Cost of Goods Sold increased to $871,841 and $535,228 respectively
in 1997 from $33,027 and $20,502 in 1996, an increase of $838,814 and $514,726.
These increases are primarily due to the following factors:
A) The acquisition of Wisdom in December 1996. This has resulted in
increased sales and cost of goods sold of approximately $580,000 and
$393,000.
B) Launch of the "SplatrFree(TM)" product in March 1997 which has
resulted in sales and cost of goods sold of approximately $74,000
and $38,000.
C) Increased sales and cost of goods sold of SDS units (1996 sales were
primarily TAPS units, which were replaced by the SDS units) which
approximated $185,000 and $83,000. In addition, the Company entered
into an exclusive distributorship agreement for distribution of its
SDS products in June 1997. During the term of five months, both
parties will attempt to negotiate a contract which will result in
either, a sell off of the company's right, title and interest in the
SDS products, longer term of exclusive distribution or non exclusive
distribution arrangement. As a result of this agreement, all SDS
products held in inventory were sold to the distributor in June
1997, which approximated $200,000 in sales.
Selling, General and Administrative expenses increased to $1,324,788 in 1997
from $424,070 in 1996 an increase of $900,718. The increase is primarily due to
the following:
A) The acquisition of Wisdom in December 1996. This has resulted in
increased expenses of approximately $560,000.
B) Marketing costs associated with the launch of the "SplatrFree(TM)"
product.
C) Preparation for the launch of "The Wand(TM)".
Research and Development costs increased to $208,668 in 1997 from $25,975 in
1996, an increase of $182,693 reflecting increased costs to develop "The
Wand(TM)".
Net Interest increased to $28,972 in 1997 from $18,997 in 1996, an increase of
$9,975, primarily due to the private placement proceeds received in late March
1997.
12
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operation (continued)
Six Months Ended June 30, 1997 as compared to the Six Months Ended June
30,1996
Statement of Operations
Revenues and Cost of Goods Sold increased to $1,634,564 and $1,006,401
respectively in 1997 from $107,385 and $73,028 in 1996 an increase of $1,527,179
and $933,373. These increases are primarily due to the following factors:
A) The acquisition of Wisdom in December 1996. This has resulted in
increased sales and cost of goods sold of approximately $1,235,000
and $803,000.
B) Launch of the "SplatrFree(TM)" product in March 1997 which has
resulted in sales and cost of goods sold of approximately $84,000
and $42,000.
C) Increased sales and cost of goods sold of SDS units (1996 sales were
primarily TAPS units, which were replaced by the SDS units) which
approximated $185,000 and $96,000. In addition, the Company entered
into an exclusive distributorship agreement for distribution of its
SDS products in June 1997. During the term of five months, both
parties will attempt to negotiate a contract which will result in
either, a sell off of the company's right, title and interest in the
SDS products, longer term of exclusive distribution or non exclusive
distribution arrangement. As a result of this agreement, all SDS
products held in inventory were sold to the distributor in June
1997, which approximated $200,000 in sales.
Selling, General and Administrative expenses increased to $2,253,506 in 1997
from $840,259 in 1996 an increase of $1,413,247. The increase is primarily due
to the following:
A) The acquisition of Wisdom in December 1996, which has resulted in
increased expenses of approximately $891,000.
B) Marketing costs associated with the launch of the "SplatrFree(TM)"
product.
C) Preparation for the launch of "The Wand(TM)".
Research and Development costs increased to $273,721 in 1997 from $63,773 in
1996, an increase of $209,948 reflecting increased costs to develop "The
Wand(TM)".
Net Interest decreased to $32,565 in 1997 from $42,711 in 1996, a decrease of
$10,146, primarily a result of the increase in the line of credit.
Liquidity and Capital Resources
At June 30, 1997, the Company's working Capital was $2,533,659, primarily
reflecting the net cash proceeds of $3,361,010 from the private placement. The
company intends to use the funds for development engineering, tooling, marketing
and other expenses associated with the introduction of "The Wand(TM)",
development of other products and general corporate purposes including working
capital.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
On March 26, 1997, Milestone and Spintech commenced legal action in the
United States District court of New Jersey against Ronald Spinello, DDS,
Chairman and Director of Research of Spintech. In the complaint,
plaintiffs seek recovery of compensatory and punitive damages in excess of
$4,000,000 for extortion and tortious interference with existing and
prospective contract and business relationships, a declaratory judgment
that Dr. Spinello has no personal rights to certain technology developed
while he was employed as Director of Research of Spintech relating to the
design and production of ancillary components of its computer controlled
local anesthetic delivery system, a declaratory judgment that plaintiffs
have not breached Dr. Spinello's employment agreement or the agreement for
the initial purchase by Milestone of a 65% equity interest in Spintech and
injunctive relief. On May 21, 1997, Dr. Spinello filed an answer and
counterclaim which denies the material allegations of the complaint and
seeks recovery for breach of the defendant's employment agreement,
initiates a derivative action against Milestone with respect to various
expenditures and actions for which Defendant, on behalf of Spintech, seeks
an amount in excess of $75,000, alleges civil conspiracy against Milestone
with respect to certain of those matters and the entry into the employment
agreement with Defendant and seeks indemnification for expenses, including
attorneys fees, in the pending action. On May 25, 1997 the Company filed a
reply to counterclaims which denied all of the material allegations of the
counterclaims. Milestone has been advised by its patent counsel that all
technology developed by Dr. Spinello while employed by Spintech is owned
by Spintech. The Company believes that ownership of the technology
relating to these ancillary components which are the subject of this
litigation in no way prevents the manufacture and sale of its anesthetic
delivery system at economically viable prices.
On May 20, 1997, Glenn R. Spinello filed a Complaint in the Court of
Common Pleas, York County, Pennsylvania seeking damages as a result of the
alleged breach of his Employment Agreement. On June 20, 1997, the company
and Spintech filed a notice of Removal which transferred venue of Glenn
Spinello's lawsuit to the United States District Court for the Middle
District of Pennsylvania. On June 27, 1997, the Company and Spintech filed
an Answer to Glenn Spinello's Complaint which denied the material
allegations of the Complaint and asserted counterclaims based upon Glenn
Spinello's breach of his Employment Agreement.
14
<PAGE>
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.
MILESTONE SCIENTIFIC INC.
-------------------------
(Registrant)
Date: August 1, 1997 /s/Leonard Osser
-------------------------------------------
LEONARD OSSER
President, Chief Executive Officer and
Chief Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in the registrants' Form 10-QSB for the quarter
ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,415,633
<SECURITIES> 0
<RECEIVABLES> 559,685
<ALLOWANCES> 0
<INVENTORY> 560,929
<CURRENT-ASSETS> 3,605,069
<PP&E> 495,673
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,108,604
<CURRENT-LIABILITIES> 1,071,410
<BONDS> 250,000
0
0
<COMMON> 5,563
<OTHER-SE> 5,031,631
<TOTAL-LIABILITY-AND-EQUITY> 6,108,604
<SALES> 1,634,564
<TOTAL-REVENUES> 1,634,564
<CGS> 1,006,401
<TOTAL-COSTS> 1,006,401
<OTHER-EXPENSES> 2,527,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,863,899)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,863,899)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> 0
</TABLE>
