<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File Number: 33-39231
--------
Soulfood Concepts, Inc.
- ------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 13-3585743
- ------------------------------------------------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
630 Ninth Avenue, New York, New York 10036
- ------------------------------------------------------------------------------
(Address if Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (212) 262-6247
--------------
- -------------------------------------------------------------------------------
(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 Securities Exchange Act of 1934 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 No X
------- -------
The number of shares outstanding of the issuer's only class of common stock, par
value $.003 per share, as of November 7, 1997 was 3,373,172 shares.
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 121,958 $ 80,751
Accounts Receivable 79,023 45,293
Inventory 54,987 30,489
Prepaid Expenses 42,312 22,422
Escrow Advance - 33,500
Loans & Exchange - 15,968
----------- ------------
Total Current Assets 298,280 228,423
Property and Equipment, Net of Accumulated
Depreciation of $338,125 and $215,037, respectively 992,220 262,032
Intangible Assets, Net of Accumulated Amortization
of $520,250 and $387,405, respectively 493,353 36,735
Security Deposits 52,407 49,357
Deferred Taxes - -
----------- ------------
TOTAL ASSETS $ 1,836,260 $ 576,547
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 1 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - LIABILITIES AND
STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash Overdraft $ - $ 3,851
Current Portion of Long-Term Debt 26,485 10,956
Accounts Payable & Accrued Expenses 463,920 257,709
Obligation Under Capital Lease 2,066 5,533
Loan and Exchange 462 -
----------- -----------
Total Current Liabilities 492,933 278,049
Long-Term Debt (Notes 5 & 7) 1,049,235 171,199
----------- ------------
TOTAL LIABILITIES 1,542,168 449,248
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, par value $.003; Authorized
500,000 shares; issued and outstanding
125,000 shares 375 375
Common Stock, par value $.003; Authorized
14,500,000 shares; issued and outstanding
3,439,816 shares 10,320 9,420
Additional Paid-in Capital 984,749 765,649
Partners'Capital 77,161 (18,356)
Accumulated Deficit (778,513) (629,789)
----------- ------------
Total Stockholders' Equity 294,092 127,299
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,836,260 $ 576,547
=========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 2 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------ --------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
SALES $ 4,090,186 $ 2,625,223 $ 1,517,216 $ 905,265
COST OF SALES 1,143,898 709,922 421,502 242,915
----------- ----------- ----------- -------------
GROSS PROFIT 2,946,288 1,915,301 1,095,714 662,350
----------- ----------- ----------- -------------
Operating Expenses 2,631,170 1,708,791 1,060,784 576,698
Interest Expense 84,613 39,245 40,909 12,810
----------- ----------- ----------- -------------
2,715,783 1,748,036 1,101,693 589,508
----------- ----------- ----------- -------------
Income Before Depreciation, Amortization,
Other Income (Expenses) and Provision
for Income Taxes 230,505 167,265 (5,979) 72,842
Depreciation & Amortization (135,846) (59,074) (50,471) (19,673)
Interest Income 322 - 21 -
Pre-Opening Expenses (135,496) - (60,884) -
----------- ----------- ----------- -------------
(LOSS) INCOME BEFORE PROVISION FOR
INCOME TAXES (40,515) 108,191 (117,313) 53,169
PROVISION FOR INCOME TAXES 7,692 10,948 2,320 8,196
----------- ----------- ----------- -------------
NET INCOME (LOSS) $ (48,207) $ 97,243 $ (119,633) $ 44,973
=========== =========== =========== =============
EARNINGS PER SHARE:
Primary $ (.01) $ .01 $ (.01) $ .01
============ ============= =========== =============
Fully Diluted $ (.01) $ .01 $ (.01) $ .01
============ ============= =========== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 3 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
-------------------- -------------------- Paid-in Partners'
Shares Amount Shares Amount Capital Capital
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1994 - $ - 5,468,753 $ 5,469 $ 14,837 $ (69,273)
Distributions - - - - - (812)
Net Income (Loss) - - - - - 17,615
------- -------- --------- -------- -------- ----------
Balance - December 31, 1995 - - 5,468,753 5,469 14,837 (52,470)
Issuance of Common Stock in
Conversion of Stockholder Loan - - 2,750,690 2,751 547,387 -
Reverse 1 for 3 Stock Split - - (5,479,627) - - -
Issuance of Common Stock in
Conversion of Stockholder Loan - - 400,000 1,200 78,800 -
Issuance of Preferred Stock in
Conversion of Stockholder Loan 125,000 375 - - 124,625 -
Distributions - - - - (16,880)
Net Income - - - - 50,994
------- -------- --------- -------- -------- ----------
Balance - December 31, 1996 125,000 375 3,139,816 9,420 765,649 (18,356)
Issuance of Common Stock - - 300,000 900 219,100 -
Distributions - - - - (5,000)
Net Income (Loss) - - - - 100,517
------- -------- --------- -------- -------- ----------
Balance - September 30, 1997 125,000 $ 375 3,439,816 $ 10,320 $ 984,749 $ 77,161
========= ======== ========= ======== ========= ==========
<CAPTION>
Total
Accumulated Stockholders'
Deficit Equity (Deficit)
----------- ---------------
<S> <C> <C>
Balance - December 31, 1994 $ (363,087) $ (412,054)
Distributions - (812)
Net Income (Loss) (279,678) (262,063)
----------- ---------------
Balance - December 31, 1995 (642,765) (674,929)
Issuance of Common Stock in
Conversion of Stockholder Loan - 550,138
Reverse 1 for 3 Stock Split - -
Issuance of Common Stock in
Conversion of Stockholder Loan - 80,000
Issuance of Preferred Stock in
Conversion of Stockholder Loan - 125,000
Distributions (16,880)
Net Income 12,976 63,970
----------- ---------------
Balance - December 31, 1996 (629,789) 127,299
Issuance of Common Stock - 220,000
Distributions - (5,000)
Net Income (Loss) (148,724) (48,207)
----------- ---------------
Balance - September 30, 1997 $ (778,513) $ 294,092
=========== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 4 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------------
1997 1996
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (48,207) $ 97,243
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 135,846 59,074
(Increase) Decrease In:
Accounts Receivable (33,730) (2,886)
Prepaid Expenses (19,890) (6,784)
Inventory (24,498) (1,168)
Loans and Exchange 16,430 1,604
Security Deposits (3,050) (14,500)
Other Assets (589,463) -
(Decrease) Increase In:
Accounts Payable & Accrued Expenses 206,211 (69,431)
------------- ------------
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (360,351) 63,152
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (853,276) (72,690)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Debt 1,078,957 126,738
Repayment of Debt (34,374) (45,419)
Increase in Additional Paid-in Capital 219,100 -
Partner Distributions (5,000) (13,880)
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,258,683 67,439
------------- ------------
Net Increase in Cash During the Period 45,056 57,901
Cash - January 1, 76,902 9,351
------------- ------------
Cash - September 30, $ 121,958 $ 67,252
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid During the Period:
Interest $ 6,094 $ 2,894
============ ============
Taxes $ 4,595 $ 1,408
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 5 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a. Basis of Presentation
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-QSB and Regulation S-B. 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 management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair
presentation have been included.
For further information refer to the financial statements and
footnotes included in the Company's report for the year ended
December 31, 1996.
The results of Operations for any interim period are not
necessarily indicative of the results to be expected for the
year ended December 31, 1997.
The accompanying consolidated financial statements include the
accounts of Soulfood Concepts, Inc. ("The Company"), a holding
company organized under the laws of the state of Delaware
during October, 1984 and its subsidiaries:
1) Shark Restaurant Corp., ("SRC") incorporated under the laws of
the State of New York on June 7, 1990 (owned 100% by the
Company);
2) Affair Restaurant, Inc. ("Shark Bar Chicago"), purchased on
January 10, 1997 from Affair, L.P. (See Note 5), (owned 100%
by the Company); and
3) Shark Restaurant California Corp. ("Shark Bar L.A."),
incorporated under the laws of the State of California on June
1, 1997 (owned 100% by the Company);
4) Avenue A Restaurant Associates, L.P. ("Avenue A"), organized as
a limited partnership pursuant to a limited partnership
agreement dated September 1994 (owned 62% by 7 West);
5) 7 West Corp. ("7 West"), incorporated under the laws of the
State of New York on February 1, 1994 (owned 100% by the
Company);
6) Shark Catering Corp., ("SCC"), incorporated under the laws of
the State of New York on May 14, 1992 (owned 100% by the
Company); currently inactive.
7) TWS Restaurant, Corp. ("TWS"), incorporated under the laws of
the State of New York on May 1, 1995 (owned 100% by the
Company); currently inactive.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
- 6 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (cont'd)
b. Earnings Per Share
The computation of primary earnings per share is based on the
weighted average number of outstanding common shares during the
period. Fully diluted earnings per share additionally assumes
the conversion of outstanding Preferred Stock.
NOTE 2 - INVENTORY
Inventory consisted of the following at:
September 30, December 31,
1997 1996
------------ ------------
Food $ 12,736 $ 6,459
Beverage 42,252 23,611
---------- ----------
54,988 30,070
Other Merchandise - 419
---------- ----------
$ 54,998 $ 30,489
========== ==========
NOTE 3 - PROPERTY AND EQUIPMENT
Property and Equipment consisted of the following:
Accumulated Net Book
Cost Depreciation Value
------------ ------------ --------
September 30, 1997
------------------
Furniture, Fixtures &
Equipment $ 775,695 $ 265,869 $ 509,826
Leasehold Improvement 554,650 72,256 482,394
------------ ------------ -----------
$ 1,330,345 $ 338,125 $ 992,220
============ =========== ===========
December 31, 1996
-----------------
Furniture, Fixtures &
Equipment $ 370,100 $ 170,293 $ 199,807
Leasehold Improvement 106,969 44,744 62,225
------------ ----------- -----------
$ 477,069 $ 215,037 $ 262,032
============ =========== ===========
Depreciation and amortization expense of property and equipment for the
nine months ended September 30, 1997 was $135,846.
- 7 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTANGIBLE ASSETS
Intangible Assets consisted of the following:
Accumulated Net Book
Cost Amortization Value
----------- ------------ -----------
September 30, 1997
------------------
Organization Cost $ 57,365 $ 27,554 $ 29,811
Cost of Leasehold 660,000 368,364 291,636
Restrictive Covenant 10,000 10,000 -
Goodwill 10,000 10,000 -
Prepaid Opening Costs 276,238 135,846 140,392
----------- ------------ -----------
$ 1,013,603 $ 520,250 $ 493,353
=========== ============ ===========
December 31, 1996
-----------------
Organization Cost $ 24,140 $ 23,120 $ 1,020
Cost of Leasehold 380,000 344,285 35,715
Restrictive Covenant 10,000 10,000 -
Goodwill 10,000 10,000 -
----------- ------------ ----------
$ 424,140 $ 387,405 $ 36,735
=========== ============ ==========
Prepaid Opening Costs were incurred by the two new restaurants prior to
their opening to the general public. Once they are opened, these costs
are required to be expensed by the close of the calendar year.
- 8 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
September 30, December 31,
1997 1996
------------- ------------
Working capital loan from Citibank,
bearing interest at 11.5% per annum
on the outstanding balance, payable
in monthly installments of $913
principal only with interest accrued,
maturing in January, 1999. $ 14,604 $ 22,826
The Company has also arranged a
financing loan with Citibank for the
lease of equipment with a monthly
payment of $1,294 40,019 -
Advances from officer of the Company.
It is intended that these advances
will be exchanged for preferred stock.
Interest has been accrued on these
advances at 10% per annum. 504,937 73,169
Partner loans to Avenue A Restaurant
Associates, L.P. being repaid on a
quarterly basis. Interest is also
being paid on a quarterly basis at
10% per annum to the limited partners
and any unpaid amounts have been
accrued. 66,160 86,160
The Company received a $100,000 note
in February 1997, payable at 10% per
annum due February 4, 1999. Interest
is due semi-annually. 100,000 -
The Company also received a $350,000
note in May 1997 from the Aton Fund
investment group payable at 10% per
annum due May 21, 1999. Interest is
due semi-annually. 350,000 -
----------- ----------
Total 1,075,720 182,155
Less: Current Portion 26,485 10,956
----------- ----------
Long-Term Debt $ 1,049,235 $ 171,199
=========== ==========
- 9 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
The provision for income taxes is summarized as follows:
September 30, June 30,
1997 1996
------------- ----------
Federal Income Tax $ - $ -
State and Local 7,692 2,752
------------ ----------
7,692 2,752
Tax Benefit of Net Operating Loss
Carryfowards - -
------------ ----------
Provision for Income Taxes $ 7,692 $ 2,752
============ ==========
The Company has net carryforward losses substantially in excess of their
profits. Because of the uncertainty of future profits, a valuation
allowance has been established equal to the tax benefit of the loss
carryforwards.
The loss carryforwards expire as follows:
December 31,
2007 $ 4,419
2008 26,900
2009 218,652
2010 120,030
-----------
$ 370,001
===========
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company or its subsidiaries is obligated under several rental
agreements.
1. Shark Bar Restaurant space expires 1999. Annual rent of $82,800 with no
scheduled increases.
2. Shark Bar Restaurant extension expires 1999. Annual rent of $29,800
increasing to $36,200 by expiration.
3. Office space expiring August 1998 with an annual rent of $31,800
increasing to $32,400 by expiration.
4. Mekka Restaurant space expires December, 2002 with an annual rent of
$44,128 increasing to $53,628 by expiration. There is an option to extend
the lease five years for a $20,000 fee. This agreement includes an
additional rental of 1% of sales monthly to be paid monthly.
5. Shark Bar Chicago space expires July 31, 1999 with an annual base rent of
$48,000. The agreement also calls for an additional rental of 8% of sales
that exceed $50,000 monthly to be paid monthly with a maximum additional
rent of $5,000 per month.
6. Shark Bar L.A. space expires March 21, 2001 with three, five year
options which would run through March 21, 2016. The annual base rent is
$84,000 with scheduled increases of $6,000 per year beginning March 21,
1998.
- 10 -
<PAGE>
SOULFOOD CONCEPTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - STOCKHOLDERS' EQUITY
During the fiscal year 1997, the Company has entered into the following
transactions involving the issuance of securities:
1. On January 17, 1997, the Company issued 100,000 shares of the Company's
common stock ("Common Stock") to a private investor in exchange for
$20,000.
2. Pursuant to the terms of a Stock Purchase Agreement dated February 4,
1997, among other things, the Company issued 100,000 unregistered shares
of Common Stock and a Warrant to purchase an additional 20,000 of common
stock at an exercise price of $1.00 to a private investor, with
registration rights relating thereto.
3. Pursuant to the terms of a Note Purchase Agreement dated May 21, 1997,
the Company received $350,000 in exchange for the Company's 10%
Convertible Secured Notes (the "Notes") in the aggregate principal amount
of $350,000 and warrants at an exercise price of $1.00. The Notes are
convertible into the number of fully-paid shares of Common Stock as shall
be equal to the aggregate principal amount of the Notes, and interest
accrued thereon, divided by $1.00. The shares of Common Stock underlying
the Notes and the warrants are subject to registration rights.
4. Pursuant to the terms of a Stock Purchase Agreement dated June 6, 1997,
among other things, the Company issued 100,000 unregistered shares of
Common Stock and a warrant to purchase an additional 10,000 shares of
Common Stock at an exercise price of $1.00 to a private investor, with
registration rights relating thereto.
5. Pursuant to the terms of an Engagement Letter dated (February 5, 1997)
between the Company and Commonwealth Associates ("CA"), whereby CA was
engaged to render corporate finance and other financial service matters,
the Company granted to CA warrants to purchase 188,000 shares of Common
Stock at an exercise price of $.01 per share.
6. The Avenue A Restaurant Associates partners have options to purchase 1
share of the Company's Common Stock at $1.00 per share for each $2.00
invested.
- 11 -
<PAGE>
SOULFOOD CONCEPTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements and information relating to two new restaurants that opened on March
22, 1997 (Chicago) and September 17, 1997 (Los Angeles).
Results of Operations for Nine Months Ended September 30, 1997 and 1996, and
Three Months Ended September 30, 1997 and 1996
Sales for the nine months ended September 30, 1997 increased by approximately
56% to $4,090,186 from sales of $2,625,223 during the nine months ended
September 30, 1996. The principal reasons were an 8% sales increase at two
existing locations, as well as two new restaurant locations which contributed
$1,226,585 to nine month sales. Sales for the company for the three months ended
September 30, 1997 of $1,517,216 were approximately 68% more than sales for the
three months ended September 30, 1996 of $905,265. On-site operating profits,
before corporate G&A, taxes and depreciation, increased at Shark Bar New York
from $324,110 (18% of sales) for the nine months ending September 30, 1996 to
$512,019 (25% of sales) for the 1997 corresponding period, an increase in
percentage terms of better than 50%. Cost of sales increased to 27.96% during
1997 from 27.04% during 1996.
At the corporate level, income before depreciation, amortization, other income
(expenses) and provision for income taxes increased to $230,505 from $167,265 in
the previous year. This increase is due to higher sales and lower operating
expenses as a percentage of sales at existing stores.
Liquidity and Capital Resources and Subsequent Acquisitions
Cash at September 30, 1997 was $121,958 which increased from $80,751 at December
31, 1996 due to new locations providing additional cash flow. Assets increased
by $1,259,713 to $1,836,260 mainly due to the acquisitions and opening of two
new restaurant locations in Chicago and Los Angeles. Total liabilities increased
by $1,092,920 to $1,542,168 in part due to loans raised in acquiring the two new
restaurants.
In furtherance of the Company's nationwide expansion strategy, the Company has
committed to purchase an existing 10,000 square foot restaurant and lease called
"Jasmin's" in Atlanta, Georgia. The lease is for eight years with a five year
option with an annual base rent of $67,200, thereafter adjusted by the capital
CPI index.
The Company believes that its cash flow from operations will provide adequate
resources to meet its capital requirements and operational needs for the
foreseeable future.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
NONE
- 13 -
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SOULFOOD CONCEPTS, INC.
November 12, 1997
Date:________________________ By: /s/ Brian Hinchcliffe
---------------------------------
Brian Hinchcliffe,
President
November 12, 1997
Date:________________________ By: /s/ Kevin Starkes
--------------------------------
Kevin Starkes
Vice President and Treasurer
(Principal Financial Officer)
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 121,958
<SECURITIES> 0
<RECEIVABLES> 79,023
<ALLOWANCES> 0
<INVENTORY> 54,987
<CURRENT-ASSETS> 298,280
<PP&E> 42,312
<DEPRECIATION> 338,125
<TOTAL-ASSETS> 1,836,260
<CURRENT-LIABILITIES> 492,933
<BONDS> 0
<COMMON> 10,320
0
375
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,836,260
<SALES> 1,517,216
<TOTAL-REVENUES> 0
<CGS> 421,502
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,060,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,909
<INCOME-PRETAX> 117,313
<INCOME-TAX> 2,320
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,633
<EPS-PRIMARY> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
