UNITED STATES
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 quarterly period ended June 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-18271
MAGELLAN TECHNOLOGY, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Utah 87-0467614
- --------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
13526 South 110 West
Draper, Utah 84020
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 495-2211
----------------------
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 and 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 _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Outstanding at
Class June 30, 1998
----- ------------------
Common Stock, $.0002 par value 24,397,933 shares
<PAGE>
FORM 10-QSB
Financial Statements and Schedules
Magellan Technology, Inc.
For the Quarter Ended June 30, 1998
The following financial statements and schedules of the registrant and its
consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
Condensed consolidated balance sheet for June 30, 1999 and
year-end for December 31, 1999 3
Condensed consolidated statement of operations for the
three months and six months ended June 30, 1999 and 1998 4
Condensed statement of cash flows for the six months
ended June 30, 1999 and 1998 5
Notes to condensed consolidated financial statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other information 12
Item 6(a) Exhibits 12
Item 6(b) Reports on Form 8-K 12
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<S> <C> <C>
June 30, 1999 Dec 31, 1998
ASSETS (Unaudited) (Audited)
------------- -------------
Current Assets:
Cash $ 24,118 $ 159,108
Accounts Receivable 983,623 314,643
Inventories 829,168 938,999
Prepaid Expenses 109,700 133,489
Other Current Assets 58,476 38,741
------------- -------------
Current Assets 2,005,085 1,584,980
------------- -------------
Property and Equipment, net 876,609 938,351
Goodwill, net 233,348 269,248
Licenses & Technology, net 1,268,359 1,283,594
------------- -------------
Total Assets $ 4,383,401 $ 4,076,173
============= =============
LIABILITIES
Current Liabilities:
Accounts Payable $ 1,138,462 $ 1,131,037
Accrued Personnel Costs 145,921 122,706
Accrued Liabilities 238,836 186,718
Accrued Interest Payable 109,685 61,565
Line of Credit 2,996,158 2,996,158
Related Party Notes Payable 790,000 1,840,000
Notes Payable 670,694 355,212
Current Portion of long-term debt 372,554 312,015
------------- -------------
Current Liabilities 6,462,310 7,005,410
Long-Term Debt 501,173 617,142
------------- -------------
Total Liabilities 6,963,483 7,622,553
------------- -------------
STOCKHOLDERS' EQUITY
Common Stock, par value $.0002 per share;
50,000,000 shares authorized, 24,397,933 shares
issued and outstanding as of June 30, 1999. 4,880 3,545
Additional Paid-in Capital 12,274,235 9,890,575
Unearned Compensation (100,627) (130,868)
Accumulated Deficit (13,309,632) (8,380,223)
Current Earnings/(Loss) (1,448,939) (4,929,409)
------------- -------------
Total Stockholders' equity (2,580,082) (3,546,380)
------------- -------------
Total Liabilities and Stockholders' Equity $ 4,383,401 $ 4,076,173
============= =============
<PAGE>
</TABLE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Six Months
Ended June 30 Ended June 30
1999 1998 1999 1998
------------- ------------- ------------- -------------
Net Sales $ 1,797,957 $ 735,969 $ 3,215,954 $ 978,586
Cost of Sales 322,484 92,280 552,484 136,439
------------- ------------- ------------- -------------
Gross Margin 1,475,473 643,689 2,663,470 842,147
Variable Selling Costs 348,542 189,305 725,631 205,507
------------- ------------- ------------- -------------
Contribution Margin 1,126,931 454,384 1,937,839 636,640
Operating Expenses:
Administration 257,044 359,218 334,400 647,149
Customer Support 69,457 104,619
Finance & Accounting 107,031 127,533 400,572 153,816
Marketing 203,203 324,858
R&D & Engineering 229,838 322,116 399,898 642,772
Sales - Domestic 288,224 445,986 768,015 711,760
Sales - International 86,792 108,100
Training & Education 212,015 360,702
------------- ------------- ------------- -------------
Total Operating Expenses 1,453,604 1,254,853 2,801,163 2,155,497
------------- ------------- ------------- -------------
Income/(Loss) from Operations: (326,673) (800,469) (863,324) (1,518,857)
Other (Income)/Expense:
Other Income (122) (452)
Loss from Discontinued Operations
(Gain)/Loss on Sale of Assets - - -
------------- ------------- ------------- -------------
EBITDA (326,551) (800,469) (862,872) (1,518,857)
Depreciation Expense 50,052 22,812 99,019 41,421
Amortization of Licenses & Goodwill 97,637 31,136 191,759 49,169
Interest Expense 134,358 102,212 295,289 195,357
Equity in Loss of Joint Venture 4,852 5,050
(Gain) on sale of Joint Venture (180,023) (180,023)
------------- ------------- ------------- -------------
Net Income/(Loss) before Taxes (608,598) (781,458) (1,448,939) (1,629,831)
Provision for Income Taxes - - -
------------- ------------- ------------- -------------
Net Income/(Loss) $ (608,598) $ (781,458) $ (1,448,939) $ (1,629,831)
============= ============= ============= =============
Net Income/(Loss) per share $ (0.03) $ (0.05) $ (0.08) $ (0.11)
============= ============= ============= =============
Weighted average shares outstanding 19,305,949 15,447,560 19,305,949 15,447,560
============= ============= ============= =============
</TABLE>
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months
Ended June 30
1999 1998
Cash Flows from Operating Activities: ------------- -------------
Net Income/(Loss) $ (1,448,939) $ (1,629,831)
Adjustments to Reconcile Net Income/(Loss)
to Net Cash used in Operating Activities:
Provision for Bad Debt 9,400
Stock Compensation 30,242 153,816
Depreciation Expense 99,019 41,421
Amortization of Licenses & Goodwill 191,759 49,169
Equity in Loss of Joint Venture - 5,050
(Gain) on Sale of Assets - (180,023)
(Increase)/Decrease in:
Accounts Receivable (725,980) (376,820)
Inventory 109,832 (939,038)
Prepaid Expenses 23,789
Other Current Assets (19,735) (79,527)
Increase/(Decrease) in:
Accounts Payable 95,507 267,603
Accrued Personnel Costs 23,215
Accrued Liabilities 52,118 163,163
Accrued Interest Payable 59,153
------------- -------------
Net Cash Provided by / (Used in) Operating Activities (1,500,620) (2,525,017)
------------- -------------
Cash Flows from Investing Activities:
Purchase of Property & Equipment (37,277) (216,511)
Acquisition of Digital Health
Sale of Investment in Subsidiary 1,500,000
------------- -------------
Net Cash Provided by / (Used in) Investing Activities (37,277) 1,283,489
------------- -------------
Cash Flows from Financing Activities:
Issuance of Common Stock 308,338
Proceeds from Related Party Notes 1,195,000
Principal Payments on Related Party Notes (345,000)
Proceeds from Notes Payable 325,000
Principal Payments on Notes Payable (25,000)
Proceeds from Line of Credit 1,382,122
Principal Payments on Line of Credit
Proceeds from Long-term Debt 18,798
Principal Payments on Long-term Debt (74,228) (62,442)
------------- -------------
Net Cash Provided by / (Used in) Financing Activities 1,402,907 1,319,680
------------- -------------
Net Decrease in cash (134,990) 78,152
Cash, Beginning of Period 159,108 111,402
------------- -------------
Cash, End of Period $ 24,118 $ 189,554
============= =============
</TABLE>
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months
Ended June 30
1999 1998
Cash paid during the period for: ------------- -------------
Interest $ 231,900 152,630
============= =============
Income Taxes
============= =============
</TABLE>
Non-cash Financing and Investing Activities:
During the quarter ended March 31, 1999, the Company converted $1,900,000 of
notes payable and $11,033 of accrued interest payable into common stock.
During the quarter ended March 31, 1999, the Company issued 250,000 shares of
common stock in exchange for the rights to certain technology known as the
P.I.C.E. Technology. The value of this transaction was $140,625.
During the quarter ended June 30, 1999, the Company converted certain
accounts payable balances to certain vendors to a note payable. The amount
converted was $22,879.78.
During the quarter ended June 30, 1999, the Company converted an accounts
payable balance to a certain vendor to common stock and a note payable. The
amount converted was $25,000 and 39,313.03 respectively.
During the quarter ended June 30, 1999, the Company applied an accounts
receivable balance from a customer in the amount of $47,600 to the outstanding
amount of a note payable to this same individual.
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(1) The unaudited condensed consolidated financial statements include
the accounts of Magellan Technology, Inc. (The Company) and its
wholly owned subsidiaries, BioMeridian Corporation [formerly known
as ProHealth, Inc. and prior to that known as Satellite Image
Systems, Inc. (SIS, Inc.) and SIS Jamaica, LTD (SIS Jamaica)],
SkyHook Technologies, Inc. (SkyHook), which the Company acquired
effective October 15, 1996, and BioMeridian International, Inc.
(BioMeridian) (formerly known as BioSource, Inc.) which the
Company acquired effective October 15, 1997. The acquisition of
SkyHook included the issuance of 4,874,936 shares of Magellan
common stock and cash for all of the outstanding shares of SkyHook
common stock. The transaction was accounted for as a purchase
transaction. The acquisition of BioSource included the issuance of
225,000 shares of Magellan common stock and cash for all of the
outstanding shares of BioSource common stock. The transaction was
accounted for as a purchase transaction. The Company recognized
goodwill of $358,997 in connection with the BioSource transaction.
On August 1, 1996 the Company transferred its interest in the
assets, liabilities, and operations of SIS, Inc. to Satellite
Image Systems, LLC (SIS, LLC), a joint venture. On May 12, 1998
the Company sold its 46.5% interest in SIS, LLC. In connection
with the sale the company recognized a gain of $180,023. On June
15, 1998, the Company completed the acquisition of certain
licenses and technology of Digital Health, LLC in exchange for
1,375,000 shares of common stock and $250,000 in cash payable in
monthly installments of $15,000. On February 16, 1999, the Company
acquired certain assets known as the P.I.C.E. technology from an
individual in exchange for 250,000 shares of common stock.
(2) The unaudited condensed consolidated financial statements include
all adjustments, consisting of normal recurring items, which are,
in the opinion of management, necessary to present fairly the
financial position of the company as of June 30, 1999 and the
results of operations for the three months and six months ended
June 30, 1999 and 1998 and cash flows for the six months ended
June 30, 1999 and 1998. The results of operations for the three
months ended June 30, 1999 are not necessarily indicative of
quarterly results to be expected for the remainder of the year.
<PAGE>
(3) The amount of the loss per share is based on the weighted average
number of shares outstanding at June 30, 1999 and 1998,
respectively.
(4) Effective May 12, 1998 the Company entered into an agreement to
sell its 46.5% interest in SIS, LLC. Terms of the agreement
include an initial payment of $1,500,000 and additional payments
not to exceed $1,000,000 that will be earned over the next 27
months based upon the operating results of SIS, LLC. $1,200,000 of
the funds received were used to retire a non-revolving term line
of credit. The balance of the funds was used for working capital
purposes.
(5) On May 19, 1998 the company entered into a $3,000,000 revolving
line of credit agreement. During the three months ended
June 30, 1999 the Company made no additional borrowings under
this revolving line of credit. This revolving line of credit
matures on August 19, 1999 and is secured by the Company's
inventory and receivables and by the personal guarantees of the
Company's Chief Executive Officer, a Director, and a major
shareholder. As of June 30, 1999 the Company had an
outstanding balance of $2,996,158 under this revolving line
of credit.
(6) During the six months ended June 30, 1999 the Company borrowed a
net amount of $250,000 from the Company's Chief Executive Officer,
or from entities controlled by this individual, under two separate
$100,000 unsecured note payable agreements and one $50,000
unsecured note payable agreement. Each note payable bears interest
at 12% and is payable upon demand.
(7) The Company also borrowed $350,000 and $250,000 from unrelated
parties under separate convertible note payable agreements. Each
convertible note payable bears interest at 12% and contains a
provision for the conversion of the principal amount to common
stock at a specified price. On March 31, 1999, both convertible
note payable agreements were converted to common stock at $.35 per
common share. In addition, the Company borrowed $200,000, $100,000
and $25,000 from unrelated parties under separate convertible note
payable agreements. Each bears interest at 12% and contains a
provision for the conversion of the principal amount to common
stock at a specified price. The funds from these transactions were
used to finance operations. In addition, the Company converted
certain accounts payable to a vendor into a note payable in the
amount of $39,313. This note payable bears interest at 9% and is
payable at the end of six months from the date of issuance.
(8) Effective March 31, 1999, $1,300,000 of related party notes
payable were converted to common stock of the Company.
In addition, accrued interest payable on the related
party notes payable of $11,033 was used by the related parties
to exercise warrants to purchase common stock.
<PAGE>
(9) Effective March 16, 1999, the Company has issued a formal letter
of intent to acquire Biological Technologies International, Inc.
(BTI) in a stock for stock exchange. This transaction is intended
to be accounted for as a "pooling of interests" transaction and,
as of the date of this filing, is still pending.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Six-month period ended June 30, 1999 compared to the six-month period ended June
30, 1998.
Results of BioMeridian
BioMeridian International, Inc. (BioMeridian) manufactures and sells the BEST
system to healthcare practitioners. This equipment is used to assess stress and
assist healthcare practitioners in the analysis and treatment of certain
conditions. If stress or imbalance is detected, the BEST system is used to
recommend a course of treatment or therapy to alleviate the stress or to restore
balance to the body's meridian systems. BioMeridian also provides training
classes and support services for health care practitioners that utilize the BEST
system. The BEST system is registered with the U.S. Food and Drug
Administration.
For the six months ended June 30, 1999 BioMeridian achieved sales revenues of
$3,060,409 that resulted in an operating loss of $553,530 compared with sales
revenues of $978,586 that resulted in an operating loss of $182,619 for the six
months ended June 30, 1998. The significant increase in sales is the result of
the synergies of the acquired assets and technology of BioSource and Digital
Health and the expanded user base along with the increase in the number of
independent sales representatives to approximately thirty nationwide. The
increased operating loss is primarily due to unusually high selling expenses due
to training of direct and indirect sales representatives and the elevated level
of overhead within the operation of BioMeridian. The increased overhead costs
are the result of improved marketing strategies and improved customer training
and support personnel.
Although BioMeridian has experienced operating losses during the six-month
period ended June 30, 1999, the Company believes that after an investment of
approximately $1.7 million during the past eighteen months, BioMeridian has now
reached a sustainable revenue level in excess of $500,000 per month and is
poised to achieve profitable operations in the third and fourth quarters of
1999.
<PAGE>
Results of SkyHook
Since its formation in February 1995, SkyHook Technologies, Inc. (SkyHook) has
been engaged in the development of computer-controlled multi-hook cargo
transport devices that SkyHook believes will improve the efficiency and safety
of helicopter missions by enabling the selective delivery and retrieval of
multiple external payloads during a single mission. SkyHook also believes that
its devices will allow an aircrew to more fully utilize a helicopter's load
capacity while minimizing flight time.
SkyHook's patented products include the SkyHook External Cargo Management System
(SkyHook ECMS) and the SkyHook Light Ariel Delivery System (SkyHook LADS). The
SkyHook LADS is a lower cost system designed to carry three or four separate
loads with total system load capacity of 12,000 pounds. The SkyHook LADS
complements the SkyHook ECMS that is designed to carry three or six separate
loads with a total system capacity of 36,000 pounds. With the introduction of
the LADS system to complement the ECMS product, the company can effectively meet
the varying needs of its potential customers. SkyHook has invested over $8.0
million in the development, testing and marketing of its unique products. The
Company continues an aggressive marketing campaign with the U.S. Military as its
primary potential customer.
SkyHook has made significant progress in its marketing effort with the U.S.
Military and other government agencies. During the six months ended June 30,
1999, the Kansas National Guard issued a purchase order for one Light Aerial
Delivery System (LADS). The LADS system was delivered to the Kansas National
Guard in late April 1999. SkyHook anticipates additional revenues from the sale
of SkyHook products near the end of 1999. However, currently the Company must
rely on its lines of credit and its ability to raise additional debt and equity
financing in order to finance continued product development, sales and
marketing, and all operating activities related to SkyHook and its products.
On-going operations of SkyHook are expected to consume approximately $95,000
each month.
SkyHook was recently awarded a contract with Envirofoam Technologies, Inc.
(Envirofoam) that provides for the marketing and contract management of a
patented fire suppression device that is targeted for sale to the U.S. Military.
During the six months ended June 30, 1999 SkyHook recognized revenues of
$115,500 under this contract with Envirofoam.
Three-month period ended June 30, 1999 compared to the three-month period ended
June 30, 1998.
Results of BioMeridian
For the three months ended June 30, 1999 BioMeridian achieved sales revenues of
$1,658,912 which resulted in an operating loss of $123,069 compared with sales
revenues of $735,969 which resulted in an operating loss of $49,755 for the
three months ended June 30, 1998. The significant increase in sales is the
result of the synergies of the acquired assets and technology of BioSource and
Digital Health and the expanded user base along with the increase in the number
of independent sales representatives to approximately thirty nationwide. The
increased operating loss is primarily due to unusually high selling expenses due
to training of direct and indirect sales representatives and the elevated level
of overhead within the operation of BioMeridian. The increased overhead costs
are the result of improved marketing strategies and improved customer training
and support personnel.
<PAGE>
Although BioMeridian has experienced operating losses during the three-month
period ended June 30, 1999, the Company believes that after an investment of
approximately $1.7 million during the past eighteen months, BioMeridian has now
reached a sustainable revenue level in excess of $500,000 per month and is
poised to achieve profitable operations in the third and fourth quarters of
1999.
Results of SkyHook
SkyHook has made significant progress in its marketing effort with the U.S.
Military and other government agencies. During the three months ended June 30,
1999, the Kansas National Guard issued a purchase order for one Light Aerial
Delivery System (LADS). The LADS system was delivered to the Kansas National
Guard in late April 1999. SkyHook anticipates additional revenues from the sale
of SkyHook products near the end of 1999. However, currently the Company must
rely on its lines of credit and its ability to raise additional debt and equity
financing in order to finance continued product development, sales and
marketing, and all operating activities related to SkyHook and its products.
On-going operations of SkyHook are expected to consume approximately $95,000
each month.
SkyHook was recently awarded a contract with Envirofoam Technologies, Inc.
(Envirofoam) that provides for the marketing and contract management of a
patented fire suppression device that is targeted for sale to the U.S. Military.
During the three months ended June 30, 1999 SkyHook recognized revenues of
$99,000 under this contract with Envirofoam.
Liquidity and Capital Resources
On May 19, 1998 the company entered into a $3,000,000 revolving line of credit
agreement. During the three months ended June 30, 1999 the Company made no
additional borrowings under this revolving line of credit. This revolving line
of credit matures on August 19, 1999 and is secured by the Company's inventory
and receivables and by the personal guarantees of the Company's Chief Executive
Officer, a Director, and a major shareholder. As of June 30, 1999 the Company
had an outstanding balance of $2,996,158 under this revolving line of credit.
During the six months ended June 30, 1999 the Company borrowed a net amount of
$250,000 from the Company's Chief Executive Officer, or from entities controlled
by this individual, under two separate $100,000 unsecured note payable
agreements and one $50,000 unsecured note payable agreement. Each note payable
bears interest at 12% and is payable upon demand.
The Company also borrowed $350,000 and $250,000 from unrelated parties under
separate convertible note payable agreements. Each convertible note payable
bears interest at 12% and contains a provision for the conversion of the
principal amount to common stock at a specified price. On March 31, 1999, both
convertible note payable agreements were converted to common stock at $.35 per
common share. In addition, the Company borrowed $200,000, $100,000 and $25,000
from unrelated parties under separate convertible note payable agreements. Each
bears interest at 12% and contains a provision for the conversion of the
principal amount to common stock at a specified price. The funds from these
transactions were used to finance operations. In addition, the Company converted
certain accounts payable to a vendor into a note payable in the amount of
$39,313. This note payable bears interest at 9% and is payable at the end of six
months from the issuance date.
<PAGE>
Effective March 31, 1999, $1,300,000 of related party notes payable were
converted to common stock of the Company. In addition, accrued interest payable
on the related party notes payable of $11,033 was used by the related parties to
exercise warrants to purchase common stock.
The Company has made significant investment and effort over the last five years
into the establishment of a sound framework for operating entities that are well
positioned in their respective marketplaces. Management feels that both
BioMeridian and SkyHook are now poised for success and future profitable
operations. However, there can be no assurance that the Company will be able to
achieve profitable operations or obtain the needed debt or equity capital
required on terms favorable to the Company. If the Company is unable to raise
additional capital, the ability of the Company to successfully market and
distribute its products and services through its operating subsidiaries and its
financial condition would be materially adversely affected.
PART II - OTHER INFORMATION
Item 1. Legal proceedings: None.
Item 2. Changes in Securities: None.
Item 3. Defaults upon Senior Securities: None.
Item 4. Submission of Matters to a Vote of Security Holders: None.
Item 5. Other information: None.
Item 6. Exhibits and Reports on Form 8-K: None.
<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.
MAGELLAN TECHNOLOGY, INC.
-------------------------
(Registrant)
\s\Douglas M. Angus August 12, 1998
- ------------------------ -----------------
Douglas M. Angus Date
Vice President - Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Magellan
Technology, Inc. Form 10-QSB and is qualified in its entirety by reference to
such financial statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 24,118
<SECURITIES> 0
<RECEIVABLES> 983,623
<ALLOWANCES> 0
<INVENTORY> 829,168
<CURRENT-ASSETS> 2,005,085
<PP&E> 1,163,534
<DEPRECIATION> 286,925
<TOTAL-ASSETS> 4,383,401
<CURRENT-LIABILITIES> 6,462,310
<BONDS> 501,173
0
0
<COMMON> 4,880
<OTHER-SE> (2,584,962)
<TOTAL-LIABILITY-AND-EQUITY> 4,383,401
<SALES> 3,215,954
<TOTAL-REVENUES> 3,215,954
<CGS> 1,278,115
<TOTAL-COSTS> 2,801,163
<OTHER-EXPENSES> 290,326
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 295,289
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,448,939)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,448,939)
<EPS-BASIC> (.08)
<EPS-DILUTED> (.08)
</TABLE>
