SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-28238
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in its Charter
DELAWARE 54-1521616
------------------- -----------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
22570 Markey Court, Dulles, Virginia 20166
--------------------------------------------------------
(Address of Principal Executive Offices)
(703) 444-7931
--------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
45472 Holiday Drive, Sterling, Virginia 20166
--------------------------------------------------------
(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 X NO
--- ---
Number of shares of common stock, par value $.001 per share, outstanding at
November 1, 1997: 1,114,161
------------
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
INDEX
Part I. Financial Information Page
Item 1. Financial Statements 4
Balance Sheets at September 30, 1997 and September 30, 1996 4
Statements of Income for Nine Month Periods Ended
September 30, 1997 and September 30, 1996. 6
Statements of Cash Flows for Nine Month Periods Ended
September 30, 1997 and September 30, 1996. 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
Exhibit 11 - Statement re Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
BALANCE SHEETS
September 30, 1997 and 1996
Unaudited
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
ASSETS ----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ....................... $ 47,213 $ 128,913
Accounts receivable ............................. 119,375 158,705
Interest receivable ............................. 3,674 27,216
Inventories:
Raw materials ................................. 305,529 164,560
Work in process ............................... 6,120 33,397
Finished goods ................................ 71,666 59,002
Prepaid expenses ................................ 65,604 102,835
Marketable securities ........................... 998,310 2,499,491
----------- -----------
Total current assets ..................... $ 1,617,491 $ 3,174,119
----------- -----------
PROPERTY AND EQUIPMENT
Leasehold improvements .......................... $ -- $ 115,394
Manufacturing equipment ......................... 71,745 63,477
Office furniture and equipment .................. 116,895 78,108
Land ............................................ 237,339 237,339
Construction in process ......................... -- 705,181
Building ........................................ 2,524,780 --
Less accumulated depreciation ................... (144,457) (197,126)
----------- -----------
Total property and equipment ............. $ 2,806,302 $ 1,002,373
----------- -----------
OTHER ASSETS
Certifications and patents ...................... $ 155,116 $ 132,034
Less accumulated amortization ................... (128,092) (107,458)
----------- -----------
27,024 24,576
Deposits ........................................ 4,886 45,006
----------- -----------
Total other assets ....................... $ 31,910 $ 69,582
----------- -----------
Total assets ............................. $ 4,455,703 $ 4,246,074
=========== ===========
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
----------- -----------
LIABILITIES AND STOCKHOLDERS'EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Notes payable ................................................................ $ 753,593 $ 323,216
Notes payable - related parties .............................................. -- 1,200
Current portion of long-term debt - insurance ................................ 60,471 55,908
Accounts payable ............................................................. 237,135 306,693
Customer deposits ............................................................ 4,730 11,573
Accrued expenses ............................................................. 59,734 35,560
Deferred taxes ............................................................... 308 --
----------- -----------
Total current liabilities ............................................. $ 1,115,971 $ 734,150
----------- -----------
LONG-TERM LIABILITIES
Long-term debt-insurance ..................................................... $ 43,021 $ 103,493
Notes payable ................................................................ 900,000 --
----------- -----------
Total long-term liabilities............................................ $ 943,021 $ 103,493
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.001, authorized 15,000,000
shares, issued and outstanding 1,114,161 shares in
1997; 1,114,161 shares in 1996 ............................................. $ 3,342 $ 3,342
Additional paid-in capital, including contributed
services of $37,500 in 1996 ................................................ 4,138,275 4,121,932
Less notes receivable for the purchase of common stock ....................... (33,080) (33,080)
Preferred stock, $.20 par value, authorized 1,000,000
shares; no shares issued and outstanding in 1997
and 1996 ................................................................... -- --
Unrealized gain on marketable securities ..................................... 1,745 2,473
Accumulated deficit since December 7, 1995, (termination of
S corporation status in which a deficit of $2,320,227 was
applied against additional paid-in capital) ................................ (1,713,571) (686,236)
----------- -----------
Total stockholders' equity ............................................ $ 2,396,711 $ 3,408,431
----------- -----------
Total liabilities and stockholders' equity............................. $ 4,455,703 $ 4,246,074
=========== ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
STATEMENTS OF INCOME
For the Nine Months Ended September 30, 1997 and 1996
Unaudited
<TABLE>
<CAPTION>
Three Month Periods Nine Month Periods
Ended September 30, Ended September 30,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales ....................................... $ 293,651 $ 384,359 $ 749,464 $ 1,253,642
Cost of goods sold .............................. 308,116 303,164 850,061 1,075,339
----------- ----------- ----------- -----------
Gross profit (loss) ............................. $ (14,465) $ 81,195 $ (100,597) $ 178,303
General and admin expenses ...................... 113,886 194,781 464,127 512,541
Selling expenses ................................ 65,619 101,465 198,441 385,261
----------- ----------- ----------- -----------
Operating loss .................................. $ (193,970) $ (215,051) $ (763,165) $ (719,499)
Financial income (expense):
Interest income ................................. 18,930 51,108 89,683 59,024
Interest expense ................................ (52,356) (1,699) (157,930) (10,805)
Rent Income ..................................... 25,510 -- 70,700 --
Gain on Sale of Investments ..................... 118 -- 3,863 --
----------- ----------- ----------- -----------
Loss before income taxes ........................ $ (201,768) $ (165,642) $ (756,849) $ (671,280)
Income taxes .................................... -- -- -- --
----------- ----------- ----------- -----------
Net loss ........................................ $ (201,768) $ (165,642) $ (756,849) $ (671,280)
=========== =========== =========== ===========
Primary loss per common and common
equivalent shares ............................... $ (.18) $ (.15) $ (.68) $ (.71)
Fully diluted loss per common and
common equivalent shares ........................ $ (.18) $ (.15) $ (.68) $ (.71)
Weighted Average
Shares Outstanding .............................. 1,114,161 1,114,161 1,114,161 951,244
No dividends were paid
See Notes to Financial Statements
</TABLE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
For the Nine months Ended September 30, 1997 and 1996
Unaudited
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ............................................ $ (756,849) $ (671,280)
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation ...................................... 62,073 25,185
Amortization ...................................... 6,149 7,036
Contributed services .............................. -- 37,500
Change in assets and liabilities:
(Increase) in accounts receivable ............... (58,377) (58,461)
(Increase) decrease in interest receivable ...... 56,774 (27,216)
(Increase) decrease in inventories .............. 202,267 (19,936)
(Increase) decrease in prepaid
expenses and deposits ......................... 31,572 (114,855)
Increase (decrease) in accounts payable and
accrued expenses .............................. (599,631) 170,843
Increase (decrease) in customer deposits ........ 731 (46,498)
----------- -----------
Net cash used in operating activities ........... $(1,055,291) $ (697,682)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment .................. $ (258,203) $(1,002,562)
Acquisition of patent rights and certification ...... (5,303) (21,425)
Proceeds from redemption of marketable securities ... 2,491,017 --
Purchase of securities available for sale ........... (996,257) (2,497,018)
----------- -----------
Net cash provided by/used in
investing activities ........................ $ 1,231,254 $(3,521,005)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings ................. $ 498,535 $ 323,216
Principal payments on short-term borrowings ......... (1,595,496) (222,291)
Proceeds from long-term borrowings .................. 900,000 187,000
Principal payments on long-term debt ................ (45,795) (27,599)
Proceeds from public offering ....................... -- 4,985,250
Public offering costs ............................... -- (1,274,283)
----------- -----------
Net cash provided by financing activities ...... $ (242,756) $ 3,971,293
----------- -----------
Net increase (decrease) in cash and cash equivalents $ (66,793) $ (247,394)
Cash and cash equivalents at beginning of period ...... 114,006 376,307
----------- -----------
Cash and cash equivalents at end of period ............ $ 47,213 $ 128,913
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ....................................... $ 156,014 $ 19,269
=========== ===========
Income taxes ................................... $ -- $ --
=========== ===========
See Notes to Financial Statements
</TABLE>
<PAGE>
Notes to Financial Statements
Note 1 ORGANIZATION AND BUSINESS
Guardian Technologies International, Inc. (The Company) was
reincorporated in the State of Delaware in February, 1996, as part of a plan of
Agreement and Merger between Guardian Technologies International, Inc., a
Virginia corporation, and Guardian Technologies International, Inc., a Delaware
corporation. The Company manufactures and distributes soft armor products,
primarily superior quality ballistic protective vests, for law enforcement
officers, armed forces personnel, and other legitimate individuals or groups
requiring protective equipment.
Note 2 BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company's
management, the disclosures are adequate to make the information presented not
misleading, and the financial statements contain all adjustments necessary to
present fairly in all material respects the financial position as of September
30, 1997 and 1996, results of operations for the nine months ended September 30,
1997 and 1996 and cash flows for the nine months ended September 30, 1997 and
1996.
The results of operations for the nine months ended September 30, 1997
are not necessarily indicative of the results to be expected for the full year.
Note 3 REVERSE STOCK SPLIT
Effective on May 23, 1997 the Company's Common Stock and Class A
Warrants were split on a reverse basis 1 for 3. For each three shares of Common
Stock outstanding prior to the reverse split, one new share of Common stock was
issued. For each three Class A warrants outstanding prior to the reverse split,
one new Class A Warrant was issued. Each new Class A Warrant entitled the
registered holder thereof to purchase one new share of Common Stock until May
13, 1999 at a new exercise price of $15.00 per share.
Note 4 GENERAL SERVICES ADMINISTRATION (GSA) CONTRACT
The Company negotiated a new contract with the General Services
Adminstration (GSA), the purchasing agent for the U.S. Government. On June 1,
1997 the Company began its listing on the new GSA Schedule which allows the
Company to market its product lines directly to new federal government and U.S.
military customers rather than through a third-party vendor. The Company
published a products catalog which has been mailed to 1,350 GSA procurement
officers. As of June 30, 1997 the Company had received and fulfilled its first
orders under this contract.
During the third quarter of 1997 the Company recorded $49,199 in sales
through its contract with the General Services Administration. As of November 1,
1997, the Company has received orders of $466,000 and it has fulfilled and
recorded as sales $135,000 for the fourth quarter of 1997 through its contract
with the GSA.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996.
Net sales for the three months ended September 30, 1997 were $293,651,
compared to $384,359 for the same period in 1996. The decrease in sales was
attributable to a lower production volume. The Company's gross loss for the
three months ended September 30, 1997 was $14,465 compared to a gross profit of
$81,195 for the same period in 1996. Gross profit decreased due to the lower
production volume level and a higher cost of materials. Total operating expenses
for the three month period ended September 30, 1997 were $179,505, compared to
$296,246 for the same period in 1996. The decrease in cost of $116,741 was
composed of a $80,895 decrease in general and administrative costs and a $35,846
decrease in selling expenses. The decrease in general and administrative
expenses included a $30,395 decrease in professional fees and a $12,093 decrease
in rent expense. The decrease in selling expenses was composed primarily of a
decrease in sales consultants of $25,101. In the three months ended September
30, 1997, non-operating net expenses increased over the same period last year by
$57,207 due primarily to additional interest costs associated with the $900,000
note obtained on February 7, 1997. The net loss for the three months ended
September 30, 1997 was $201,768, or $36,126 more than the loss of $165,642 for
the same period in 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
Net sales for the nine months ended September 30, 1997 were $749,464,
compared to $1,253,642 for the same period in 1996. The decrease in sales was
attributable to a number of factors, including completion of a significant
contract which accounted for 21 percent of sales in the three months ended March
31, 1996, which was not replaced in 1997, and dislocations caused by the
Company's move to its new office and manufacturing facility. The Company's gross
loss for the nine months ended September 30, 1997 was $100,597 compared to a
gross profit of $178,303 for the same period in 1996. Gross profit decreased due
to the lower production volume level as well as a higher cost of materials.
Total operating expenses for the nine month period ended September 30, 1997 were
$662,568, compared to $897,802 for the same period in 1996. The decrease in cost
of $235,234 was composed of a $48,414 decrease in general and administrative
costs and a $186,820 decrease in selling expenses. The decrease in general and
administrative expenses included a $24,186 decrease in rent expense and a
$20,010 decrease in consultant expense. The decrease in selling expenses was
composed primarily of a decrease in commissions and fees of $45,401 and a
decrease in sales consultant costs of $54,091. In the nine months ended
September 30, 1997, non-operating net income decreased over the same period last
year by $41,903 due primarily to rental income of $70,700 derived from leasing
excess space in the new facility offset by additional interest costs associated
with the $900,000 note obtained on February 7, 1997. The net loss for the nine
months ended September 30, 1997 was $756,849, or $85,569 more than the loss of
$671,280 for the same period in 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30,
1997 AND THREE MONTHS ENDED MARCH 31, 1997
On March 27, 1997 the Board of Directors instructed the officers of the
Company to begin implementing a series of objectives to ultimately increase
sales and reduce expenses.
Net sales for the third quarter of 1997 were $293,651 which was a 9%
increase over net sales of $269,239 in the second quarter of 1997 and a 57%
increase over net sales of $186,573 in the first quarter of 1997. Cost of sales
for the third quarter of 1997 were $308,116 which was a 14% increase over cost
of sales of $270,657 in the second quarter of 1997 and a 14% increase over cost
of sales of $271,288 in the first quarter of 1997.
General and administrative expenses for the third quarter of 1997 were
$113,886 which was a 23% decrease from general and administrative expenses of
$148,893 in the second quarter of 1997 and a 43% decrease from general and
administrative expenses of $201,348 in the first quarter of 1997. Selling
expenses for the third quarter of 1997 were $65,619 which was a 2% increase over
selling expenses of $64,595 in the second quarter of 1997 and a 4% decrease from
selling expenses of $68,227 in the first quarter of 1997.
Raw materials which had been purchased towards the end of 1996 to take
advantage of volume price discounts have been utilized throughout 1997 which has
reduced inventories from $585,582 to $383,315 during 1997. This has enabled the
company to redirect its use of cash towards paying off outstanding payables and
bringing vendor accounts to current status.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has satisfied its capital requirements
through the sale of common stock to investors, loans from affiliated lenders and
security holders, and notes payable personally guaranteed by officers and
principal security holders of the Company. In addition, the Company has issued
common stock in lieu of cash for services rendered.
In May, 1996, the Company completed an initial public offering. In the
offering, the Company issued and sold 977,500 units, each unit consisting of one
share of common stock and one warrant to purchase common stock. The gross
proceeds from the offering totaled $4,985,250, and the Company received net
proceeds of $3,628,019, after deducting commissions, fees and other costs
associated with the offering.
Proceeds of the public offering were temporarily invested in short-term
securities with maturities geared to anticipated operating needs and the pending
completion of the company's new office headquarters.
At September 30, 1997, the Company had net working capital of $501,520,
stockholders' equity of $2,396,711 and accumulated losses of $1,713,571.
The Company has purchased land and completed construction of a new
facility. The total cost at June 30, 1997 is $2,762,119, composed of $237,339
for land and $2,524,780 in building costs. Construction of the new facility,
which houses the Company's manufacturing, administrative and sales operations,
was completed and occupancy commenced during January, 1997. Management has
leased approximately 25 percent of the building to other tenants.
On February 7, 1997, the Company executed a one year note for $900,000
with a commercial entity. Interest at 15 percent, annual rate, is due monthly.
After payment of three months interest, there are no further prepayment
penalties. The principal balance is due at maturity. The note is secured by a
first deed of trust on the Company's office and manufacturing facility. On April
10, 1997, the lender and the Company executed a commitment letter to extend
additional credit facilities under the above agreement. Total additional funds
available under the credit facility are $900,000. The Company may borrow up to
$650,000 with the current tenants' leases in place and up to a maximum of
$900,000 when the building is fully leased. Borrowings under the credit facility
will bear interest at 15 percent annual rate, payable monthly. The original
principal amount of $900,000 plus any borrowings under the credit facility will
be due and payable on February 7, 1999. The Company agrees to pay a minimum of
three months interest on additional borrowings during the remainder of the term
of the agreement.
At September 30, 1997, the Company's inventories were $383,315 or
$126,356 more than the prior year. The additional inventories have been
purchased for anticipated increased production.
In connection with the company's efforts to reduce costs, the salaries
of the President and Vice President have each been reduced from $100,000 to
$77,900 effective with the pay period commencing on February 17, 1997.
In an effort to increase sales of the Company's products in overseas
markets, management has hired a new international sales director.
Management continues to carry out its plan for the use of proceeds as
described in the Company's Prospectus dated May 14, 1996. The Company does not
plan to purchase the rigid product fabrication equipment identified in the
prospectus until some future time. Management has used a portion of the
resources allocated for "research/development and patents on new products" to
develop a new type of armor for community police officers and other equipment
for law enforcement. Some of the funds allocated for
"marketing/advertising/promotions" are being used to introduce these new
products in the marketplace.
The Company's independent auditor's report on the financial statements
as of and for the year ended December 31, 1996, includes a statement to the
effect that there is substantial doubt about the Company's ability to continue
as a going concern. Management intends to address these conditions by increasing
revenues from its existing and planned market expansion. There can be no
assurance, however, that the Company will be successful in these plans.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit
Number Description
---------- ---------------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K.
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
-----------------------------------------
(Registrant)
Date: November 15, 1997 By: /s/Joseph F. Fernandez
--------------------------------------
Joseph F. Fernandez Vice
President, Chief Financial Officer, Chief
Accounting Officer and Treasurer
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ---------- --------------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
NINE MONTHS ENDED 9/30/96
<TABLE>
<S> <C>
Actual shares outstanding at 1/1/96 ........................................... 788,328
Common equivalents subject to SAB Topic 4D - Warranes Antidilutive ............ --
----------
Common and common equivalent shares outstanding at 3/31/96 .................... 788,328
==========
Weighted Average Computation for 9 months ended 9/30/96
Common and common equivalent shares outstanding for entire 9 months ........... 788,328
Shares issued at IPO ............ 325,833
Outstanding for 4.5/9 months .... .50 162,916
----------
Weighted average shares outstanding for 9 months ended 9/30/96 ................ 951,244
==========
Weighted Average Computation for 3 months ended 9/30/96
Common and common equivalent shares outstanding for entire 3 months ........... 788,328
Shares issued at IPO ............ 325,833
Outstanding for 3/3 months .... 1.00 325,833
----------
Weighted average shares outstanding for 3 months ending 9/30/96 ............... 1,114,161
==========
</TABLE>
<TABLE>
<CAPTION>
Three months Nine months
ended ended
9/30/96 9/30/96
----------- -------------
<S> <C> <C>
Net Income (Loss) .............................................. $ (165,642) $ (671,280)
Net Loss per common and common equivalent shares ............... $ (0.1487) $ (0.7057)
Rounded ........................................................ $ (0.15) $ (0.71)
</TABLE>
<PAGE>
COMPUTATION OF EARNINGS PER SHARE
NINE MONTHS ENDED 9/30/97
<TABLE>
<S> <C>
Actual shares outstanding at 1/1/97 ..................................... 1,114,161
Common and common equivalent shares outstanding at 9/30/97 .............. 1,114,161
Weighted average shares outstanding for the 9 months ended 9/30/97....... 1,114,161
</TABLE>
<TABLE>
<CAPTION>
Three months Nine months
ended ended
9/30/97 9/30/97
------------- -------------
<S> <C> <C>
Net Income (Loss) ...................................... $ (201,768) $ (756,849)
Net Loss per common and common equivalent shares ....... $ (0.1810) $ (0.6792)
Rounded ................................................ $ (0.18) $ (0.68)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 47,213
<SECURITIES> 998,310
<RECEIVABLES> 119,375
<ALLOWANCES> 0
<INVENTORY> 383,315
<CURRENT-ASSETS> 1,617,491
<PP&E> 2,806,302
<DEPRECIATION> 144,457
<TOTAL-ASSETS> 4,455,703
<CURRENT-LIABILITIES> 1,115,971
<BONDS> 0
0
0
<COMMON> 3,342
<OTHER-SE> 2,393,369
<TOTAL-LIABILITY-AND-EQUITY> 4,455,703
<SALES> 749,464
<TOTAL-REVENUES> 749,464
<CGS> 850,061
<TOTAL-COSTS> 1,512,629
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157,930
<INCOME-PRETAX> (756,849)
<INCOME-TAX> 0
<INCOME-CONTINUING> (756,849)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (756,849)
<EPS-PRIMARY> (.68)
<EPS-DILUTED> (.68)
</TABLE>
