<PAGE>
U.S. 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 QUARTER ENDED DECEMBER 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR TRANSITION PERIOD FROM TO .
Commission file number 1-11064
ION LASER TECHNOLOGY, INC.
........................................................................
(Exact name of small business issuer as specified in its charter)
UTAH 87-0410364
............................ ..........................
(State or other jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3828 South Main Street
Salt Lake City, Utah 84115
........................................................
(Address of principal executive offices with Zip Code)
(801) 262-5555
................................
(Issuer's telephone number)
.......................................................
(Former name, former address and former fiscal year, if changed since last
report)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock of the Registrant outstanding as of
December 31, 1997 was 5,807,707.
Transitional Small Business Disclosure Format
(Check One)
Yes [ ] No [X]
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
ION LASER TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1997 1997
(unaudited) (audited)
------------ -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,165,900 $ 55,222
Accounts receivable, less allowance
of $80,018 and $104,375 at December 31, 1997 1,309,433 1,412,625
and March 31, 1997 respectively
Inventories 2,481,350 2,872,167
Prepaid expenses 138,782 226,326
Deferred taxes and other 6,624 20,515
------------ -----------
TOTAL CURRENT ASSETS 5,102,089 4,586,855
Property, plant and equipment, net 2,960,878 2,592,035
Investment in joint venture 189,360 189,360
Goodwill, net 1,200,741 1,246,334
Patent costs, net 453,821 414,493
Receivable from joint venture 212,805 232,945
Other assets 406,736 455,827
------------ -----------
TOTAL ASSETS $10,526,430 $9,717,849
=========== ==========
SEE ACCOMPANYING NOTES.
2
<PAGE>
ION LASER TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
December 31, March 31,
1997 1997
(unaudited) (audited)
------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 61,940 $ 45,529
Accounts payable 350,810 676,059
Accrued expenses 277,519 194,551
Accrued warranty costs 53,592 76,348
Current portion of long-term debt 20,383 30,474
Deferred revenues 225,050 -
------------ -----------
Total current liabilities 989,294 1,022,961
Long-term debt less current portion 927,471 845,583
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value:
Authorized shares - 50,000,000 5,805 5,144
Issued and outstanding shares -
December 31, 1997 - 5,807,707
March 31, 1997 - 5,144,030
Additional paid-in capital 11,960,611 8,793,074
Retained earnings (deficit) (3,306,451) (898,613)
Cumulative translation adjustment (50,300) (50,300)
------------ -----------
Total shareholders' equity 8,609,665 7,849,305
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,526,430 $9,717,849
=========== ==========
SEE ACCOMPANYING NOTES.
3
<PAGE>
ION LASER TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For nine months ended For three months ended
----------------------------------- -------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 3,955,521 $ 5,458,871 $ 851,495 $2,097,646
Cost of products sold 2,751,163 2,690,320 811,491 984,337
Selling and administrative expenses 2,945,569 2,346,831 1,126,857 924,749
Research and development expenses 639,927 193,936 326,241 93,901
------------- ------------ ----------- -----------
(2,381,138) 227,784 (1,413,094) 94,659
Other income (expense) (26,699) 78,528 9,564 (3,558)
------------- ------------ ----------- -----------
Income (loss) before income taxes (2,407,837) 306,312 (1,403,530) 91,101
Income tax (expense) benefit - - - -
------------- ------------ ----------- -----------
Net income (loss) $(2,407,837) $ 306,312 $(1,403,530) $ 91,101
============= ============ =========== ===========
Earnings (loss) per common share $(.41) $0.06 $(.24) $0.02
============= ============ =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
ION LASER TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended:
----------------------------
December 31, December 31,
1997 1996
--------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) used by $(2,407,838) $ 306,313
operating activities:
Adjustments to reconcile net income (loss) to net cash provided
Depreciation and amortization 270,579 162,139
Provision for losses on accounts receivable 24,357 7,004
Changes in operating assets and liabilities:
Accounts receivable 98,975 (639,680)
Inventories 390,817 (1,627,754)
Prepaid expenses 87,544 (69,463)
Other assets 49,091 40,828
Accounts payable and accrued liabilities (242,281) (297,797)
Accrued warranty costs (22,756) (17,755)
Deferred revenues 225,050 -
Income taxes payable 13,891 (951)
--------------- ------------
Net cash provided by (used in) operating activities (1,512,571) (2,137,116)
--------------- ------------
INVESTING ACTIVITIES:
Patent costs (43,254) (325,724)
Additions to property, plant and equipment (589,903) (1,111,059)
--------------- ------------
Net cash (used in) investing activities (633,157) (1,436,783)
--------------- ------------
FINANCING ACTIVITIES:
Proceeds from issuance of debt 111,903 -
Payments on debt (23,695) (582,319)
Proceeds from sale of common stock 3,168,198 368,750
Payments for purchase of common stock - (400,000)
--------------- ------------
Net cash provided by (used in) financing activities 3,256,406 (613,569)
--------------- ------------
Net increase (decrease) in cash and cash equivalents 1,110,678 (4,187,468)
Cash and cash equivalents at beginning of period 55,222 5,081,912
--------------- ------------
Cash and cash equivalents at end of period $ 1,165,900 $ 894,444
=============== ============
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
The unaudited, condensed consolidated, financial statements of Ion Laser
Technology, Inc. (the "Company") as of December 31, 1997 and March 31, 1997 and
for the nine months and three months ended December 31, 1997 and 1996 were
prepared by the Company without audit in accordance with generally accepted
accounting principles for interim financial information and in accordance with
the instructions to Form 10-QSB of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all necessary adjustments to the financial statements
have been made to present fairly the financial position and results of
operations and cash flows of the Company. The results of operations for the
periods presented are not necessarily indicative of the results for the
respective complete years. For further information, refer to the consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended March 31, 1997.
Earnings (Loss) Per Share
- -------------------------
Earnings (loss) per share is computed based on the weighted average number of
shares of common stock and common stock equivalent shares outstanding during
each period. Common stock equivalent shares consist primarily of stock options
that have a dilutive effect when applying the treasury stock method. The
weighted average number of shares outstanding were 5,805,720 and 5,564,330 at
December 31, 1997 and 1996, respectively.
Reclassifications
- -----------------
Certain reclassifications, none of which affect net income (loss), have been
made to the prior periods' amounts in order to conform to the current
presentation.
2. INVENTORIES
Inventories consist of the following:
December 31, March 31,
1997 1997
------------ ----------
Raw materials $1,005,071 $1,038,156
Work in progress 622,391 1,118,504
Finished goods 853,888 715,507
------------ ----------
$2,481,350 $2,872,167
============ ==========
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and the notes thereto contained
elsewhere in this report. The discussion of these results should not be
construed to imply any conclusion that any condition or circumstance discussed
herein will necessarily continue in the future.
When used in this report, the words "believes," "anticipates," "expects," and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date of this report, or
to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
NET SALES
Total sales fell from $2,097,646 in the quarter ended December 31, 1996 to
$851,495 for the quarter ended December 31, 1997. Also, sales for the nine
months ended December 31, 1997 were $3,955,521 compared to $5,458,871 for the
nine months ended December 31, 1996. Management attributes the decline in sales
to the Company's shift in focus during the second and third fiscal quarters to
research, development and market evaluation related to its Apollo 9500 curing
and whitening product, and its next generation BriteSmile laser tooth whitening
product line. Sales of products into the dental market decreased from
$1,358,000 in the third quarter of the fiscal year ended March 31, 1997 ("Fiscal
1997") to $435,000 in the third quarter of the fiscal year ended March 31, 1998
("Fiscal 1998").
The Company has expanded its sales efforts to utilize marketing partners for the
sale of its BriteSmile and new Sub-Second product lines. The Company engaged
Dental/Medical Diagnostics, Inc. ("DMD") and Sharplan Laser Industries
("Sharplan") as two new marketing partners in the second quarter. DMD and
Sharplan have existing and seasoned distribution channels. Management believes
that these new marketing channels have the potential to effect a more rapid and
broader market penetration of the Company's dental products both domestically
and internationally. The Company expects that a broader placement of its
dental equipment will help accelerate residual income from the sale of chemical
compounds used in conjunction with the Company's laser and laser-like products
for in-office patient procedures.
The Company also added two key executives. Dr. Mike Knight, DDS joined the
Company on September 22, 1997 as its Vice President of Dental Relations, and
Michael Gioffredi joined the Company on October 6, 1997 as Vice President of
Marketing and Sales.
In March 1997 the Company received FDA marketing clearance for the sale of a
Sub-Second curing device known as the Apollo 9500. In October 1997, the new
product was introduced to the dental market by the Company's exclusive domestic
distributor, DMD, as a high speed curing and whitening product. The Company
expects to begin production and delivery of the product by the end of Fiscal
1998. The Company is developing a compatible composite material and whitening
reagent which it intends to sell for use with the device. The Company's supply
agreement calls for shipment of approximately $625,000 worth of product in the
fourth quarter of Fiscal 1998, and approximately $2,000,000 of product in the
first quarter of Fiscal 1999. The Company has received a purchase order in the
amount of $2,869,250 from DMD. All units under the purchase order are
deliverable prior to July 31, 1998. In addition, the Company anticipates that
this order will be augmented by an additional order for whitening chemistry and
composite materials. Management believes that all orders under the forgoing
contracts will be timely produced and delivered.
7
<PAGE>
The Company's exclusive domestic distributor, DMD, is conducting the entire
product launch of the Apollo 9500 in the United States and Canada with minimum
requirement levels to be filled in order to maintain exclusive distribution.
The first year's purchases of the Apollo 9500 are guaranteed by DMD for
approximately $5,000,000, subject to the Company's delivery of 100 Apollo 9500
units on or before March 31, 1998 and certain other conditions. For purposes of
the agreement with DMD, the "first year" may not conclude until February 28,
1999. The purchase of $5,000,000 of Apollo 9500 units does not include any
chemicals or composites which may be purchased by DMD or its customers. With
the product launch underway for the U.S. and Canada, the Company's in-house
marketing and sales team is focusing on the advancement of laser tooth whitening
worldwide and international expansion for the Sub-Second product in the dental
and industrial photonics markets. See "Research and Development," below.
Sales of laser tooth whitening chemicals for the quarter increased 59% over the
prior year's period. This represents extensive efforts by the Company to assist
current owners of the LTW system in marketing efforts to potential patients.
The Company believes that the Sub-Second curing ability of its patent-pending
Apollo 9500 has applications in the industrial photonics industry. Market
potential of this product is being researched for industrial applications with
the Company's industrial and scientific laser products.
Despite the Company's marketing agreement with DMD and its own increased
marketing and sales activities, there can be no assurance that the factors which
have caused a decline in sales in the first three quarters of Fiscal 1998 will
not continue for the remainder of Fiscal 1998.
COST OF SALES
The Company's cost of sales for the three months ended December 31, 1997
increased when compared with the same period one year ago. The Company's gross
margin decreased from 53% in the prior period to 5% in the quarter ended
December 31, 1997. The increase in cost of sales as a percent of sales is
largely due to the reduction in sales during the period.
The Company has built facilities and spent resources for production of products
to be sold to the dental market, and for the training of dentists in the use of
those products. The decrease in the Company's gross margin for the periods
reported is attributable in part to fixed costs which the Company incurred in
order to support a larger volume of production and sales. Management believes
that the fixed costs as a percentage of sales will decrease as sales increase.
This would increase the Company's gross margin.
Warranty expenses for the quarter ended December 31, 1997 decreased by
approximately $180,000 from the quarter ended December 31, 1996. Management
believes that this decrease in warranty costs may be attributable partly to
declining sales levels, but that it primarily represents ongoing product changes
in an effort to improve the quality of the Company's dental product lines.
SELLING & ADMINISTRATIVE EXPENSES
Expenditures for selling and administrative expenses were $1,126,857 and
$924,749 for the quarters ended December 31, 1997 and 1996, respectively. The
Company continues to invest in marketing to both the dental community and the
whitening consumer. Sales and marketing expenses were approximately $602,000
during the current quarter as compared to $582,000 for the prior year's quarter.
The Company uses several forms of marketing to contact potential users of its
products, including advertising in trade magazines, attending trade shows,
mailing literature to target markets, and the utilization of field sales persons
and endorsements by high profile dentists. Management expects to continue to
spend resources on marketing and selling at levels similar to those spent in the
past, to the extent sales levels and its cash resources permit.
8
<PAGE>
RESEARCH & DEVELOPMENT EXPENSES
Research and development expenses were $326,241 and $93,901 in the quarters
ended December 31, 1997 and 1996 respectively. The Company continues to
maintain a research and development team currently focused on the development of
new dental products and the improvement of existing product lines. The increase
in research and development expenses in the current period is largely
attributable to the development of the Apollo 9500. This non-laser product has
been developed as a low-cost, high speed (less than one second) curing device
for curing composites in dental applications, and as a high speed whitening
light source. The product received FDA market clearance in March 1997. The
Company signed an exclusive license agreement with DMD for the sale of this
product into the US and Canadian markets. DMD sells high technology equipment
to the dental community. The Apollo 9500 was introduced at a national dental
convention in October by DMD.
Additionally, the research and development department of the Company has been
working towards the production of a second generation laser tooth whitening
device. This device, which the Company plans to unveil at the Chicago Midwinter
Dental Convention in February 1998, is a product which uses both laser and non-
laser energy for the whitening of teeth. The device will sell at a price which
is competitive with other dental equipment currently sold for in-office
procedures. The components of the whitening system have been tested for
safety and efficacy and have received market clearance from the Food and Drug
Administration. Testing of this new device has yielded equivalent or better
whitening results than the Company's first generation laser tooth whitening
device, and these results have been obtained with a significant reduction in the
time taken to perform the whitening procedure.
The Company has signed a research and development contract with a dental
chemical research firm, pursuant to which the firm is working toward the
development and enhancement of the Company's chemistry for the whitening of
teeth. It is anticipated that this chemistry will be marketed and sold with the
Apollo 9500 by DMD. Also, it will be sold in the aftermarket for use with the
Apollo 9500 by both DMD and the Company.
Additionally, the research and development firm is currently working towards the
development of a high speed whitening chemistry to be used with the Company's
LTW product which is anticipated to yield results at least comparable to the
current results obtained by users of the Company's LTW product, with a greatly
reduced application time. The Company believes that the time it will take for a
dentist to perform this procedure will be approximately one hour using the new
products offered. This represents a greater than 50% time savings over the
current procedure. Additionally, the products to be offered to the dentist will
be priced more competitively with other whitening agents on the market.
Management anticipates that this product will be available for shipment to the
dental community during the second quarter of Fiscal 1999.
The Company has also been working with an outside company towards the
development of a composite resin which will be formulated especially to provide
optimal results when used with the Apollo 9500. This product, which is expected
to be available for sale in the first quarter of Fiscal 1999, is being developed
for sale with the Apollo 9500.
The Company expects research and development expenditures to continue at similar
levels during the remainder of Fiscal 1998 and into Fiscal 1999, to the extent
that sales levels and its cash position permit.
INFLATION
The Company actively strives to contain costs on parts from suppliers by
renegotiating purchase order contracts. Inflation has not been a major factor in
the past and is not seen as a major factor that will impact the Company's
earnings in the immediate future.
NET INCOME (LOSS)
The Company incurred a net loss of ($1,403,530) in the third quarter of Fiscal
1998, compared to net income of $91,101 in the same quarter of Fiscal 1997. For
the nine months ended December 31, 1997, the Company incurred a net loss of
($2,407,837), compared to net income of $306,312 for the nine months ended
December 31, 1996. The
9
<PAGE>
loss is due in large part to a reduction of sales to the dental market and
increased research and development and marketing expenses. The loss is also
attributable to fixed costs which the Company incurred in order to support a
larger volume of production and sales. Notwithstanding the increase in marketing
and research expenditures by the Company, and the Company's optimistic outlook
for sales of the Company's Apollo 9500, there can be no assurance that future
net losses will not occur or, if they occur, that they will be less than the
losses sustained in Fiscal 1997 and the first three quarters of Fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position increased $1,110,678 during the nine months ended
December 31, 1997, principally as a result of the Company's placement of common
stock in May 1997. During this period, operating activities used $1,512,571
mainly due to the net loss sustained coupled with a decrease in accounts payable
and accrued liabilities.
The Company has maintained a line of credit with a bank in the amount of
$500,000. The Company currently has no borrowings against the line of credit.
Management expects that further external financing may be necessary during the
fiscal year ending March 31, 1999.
During the nine months ended December 31, 1997 the Company spent $43,000 in
attorney and other fees related to patent costs. On July 8, 1997 the Company
received a patent on its LTW system. This patent allows for certain protection
against competitors in relation to the use of lasers for tooth whitening. The
Company has notified many of those it believes to be in violation of this
patent, and has filed lawsuits against two of its competitors alleging
infringement of its patents. Management believes that it may incur significant
costs associated with the prosecution of the lawsuits and the defense of its
patents.
The Company has completed remodeling of its facilities in Salt Lake City, Utah.
Included in the remodeling of the building is a six operatory dental facility
which the Company uses for training, sales presentations, and research and
development. The Company is also in the process of implementing a new software
system for its accounting and financial applications, which is expected to
assist in creating a more efficient business environment.
In this section, the term "Current Ratio" means current assets divided by
current liabilities. "Working Capital" means current assets less current
liabilities. The Company's Current Ratio and Working Capital at December 31,
1997 and March 31, 1997 were as follows:
December 31, March 31,
1997 1997
------------ ----------
Current Ratio 5.2 4.5
Working Capital $4,112,795 $3,563,894
FORWARD-LOOKING STATEMENTS AND CERTAIN RISK FACTORS
Statements contained in this report on Form 10-QSB that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements include statements regarding the Company's expectations,
beliefs, hopes, intentions or strategies regarding the future. All forward-
looking statements included in this report are based on information available to
the Company on the date hereof and the Company assumes no obligation to update
any such statements. The Company cautions that actual results could differ
materially from those in such forward-looking statements. Among other things,
the Company's business and its results of operations may be affected by factors
which could cause actual results to differ materially from those described in
the forward looking statements contained in this report. Such factors include,
but are not limited to, factors described in the Company's Annual Report on Form
10-KSB for the year ended March 31, 1997, and the matters discussed above in
this Form 10-QSB.
10
<PAGE>
Unless revised by statements contained in this report, those factors continue to
be significant and may cause actual results to differ materially from the
forward-looking statements contained in this report. As a result of the
foregoing or other factors, there can be no assurance that the Company will not
experience material fluctuations in future operating results on a quarterly or
annual basis, which would materially and adversely affect the Company's
business, financial condition and results of operations.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On September 22, 1997, BriteSmile, Inc., a wholly owned subsidiary of the
Company commenced an action in the United States District Court for the District
of Utah against Interdent, Inc. and Premier Laser Systems, Inc. In its
complaint, the Company alleges that both Interdent and Premier have infringed
and continue to infringe the Company's patent no. 5,645,428 issued on July 8,
1997 bearing the title, "Method for Teeth Whitening" by selling tooth whitening
compositions which are activated by Arago and MOD laser.
On January 29, 1998, Interdent and Premier filed an Answer and Counterclaim
which asserted several claims and defenses, all of which relate to the validity
or enforcability of the patent. Based upon the defenses asserted in its Answer,
Premier's and Interdent's Counterclaim seeks a declaratory judgment invalidating
the '428 patent and an award of attorney fees. The Company disputes the
assertions of Premier and Interdent.
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.
Exhibit No. Description
---------- ------------
27 Financial Data Schedule
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ION LASER TECHNOLOGY, INC.
Date: February 13, 1998 /s/ Dean E. Hutchings
-----------------------
Dean E. Hutchings
Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,165,900
<SECURITIES> 0
<RECEIVABLES> 1,309,433
<ALLOWANCES> 80,018
<INVENTORY> 2,481,350
<CURRENT-ASSETS> 5,102,089
<PP&E> 2,960,878
<DEPRECIATION> 1,171,603
<TOTAL-ASSETS> 10,526,430
<CURRENT-LIABILITIES> 989,294
<BONDS> 0
0
0
<COMMON> 5,805
<OTHER-SE> 8,598,055
<TOTAL-LIABILITY-AND-EQUITY> 10,526,430
<SALES> 3,955,521
<TOTAL-REVENUES> 3,955,521
<CGS> 2,751,163
<TOTAL-COSTS> 6,336,659
<OTHER-EXPENSES> 26,699
<LOSS-PROVISION> 9,590
<INTEREST-EXPENSE> 86,582
<INCOME-PRETAX> (2,407,837)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,381,138)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,407,837)
<EPS-PRIMARY> (.41)
<EPS-DILUTED> (.41)
</TABLE>
