United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period ended September 30, 1996
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 0-28920
Access Solutions International, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 05-0426298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 Ten Rod Road
North Kingstown, RI 02852
(Address of principal executive offices)
(401) 295-2691
(Issuer's telephone number)
Check whether the issuer (1) has 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 issuer 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 of the issuer's Common Stock, $.0l par value, outstanding
as of November 15, 1996 was 3,963,940.
<PAGE>
Access Solutions International, Inc.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed balance sheets--September 30, 1996 (unaudited)
and June 30, 1996 3
Condensed unaudited statements of operations --Three
months ended September 30, 1996 and 1995 5
Condensed unaudited statements of cash flows -- Three
months ended September 30, 1996 and 1995 6
Notes to unaudited condensed financial
statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 19
<PAGE>
Access Solutions International, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Access Solutions International, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
(Unaudited)
Assets
Current assets:
<S> <C> <C>
Cash $121,997 $537,831
Trade accounts receivable, net of allowance for
doubtful accounts of $50,304 92,895 426,005
Inventories 531,216 504,450
Prepaid expenses and other current assets 50,609 61,995
------------ ------------
Total current assets 796,717 1,530,281
Fixed assets net 551,652 592,461
Other assets:
Deposits and other assets 88,463 90,940
Remote service inventory, net 68,771 79,549
Deferred financing costs 810,617 581,065
------------ ------------
Total other assets 967,851 751,554
------------ ------------
Total assets $2,316,220 $2,874,296
============= ============
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Access Solutions International, Inc.
Condensed Balance Sheets
September 30, June 30,
1996 1996
(Unaudited)
Liabilities and stockholders' deficit
<S> <C> <C>
Current liabilities:
Note payable - bank $240,000 $290,000
Notes payable - bridge 1,401,667 1,363,973
Accounts payable 966,681 695,341
Current installments of capital lease obligations 119,333 72,562
Accrued expenses 192,181 163,769
Accrued salaries and wages 474,924 467,234
Deferred revenue - prepaid service contracts 318,722 448,492
------------ -----------
Total current liabilities 3,713,508 3,501,371
Capital lease obligations, excluding current installments 25,894 31,974
------------ -----------
Total liabilities 3,739,402 3,533,345
Stockholders' deficit:
Common Stock, $.01 par value, 13,000,000
shares authorized, 1,511,865 shares issued 15,119 15,119
Additional paid-in capital 10,599,720 10,599,720
Accumulated deficit (12,019,965) (11,255,832)
------------ -----------
(1,405,126) (640,993)
Treasury stock, at cost (1,259 shares) (18,056) (18,056)
------------ ----------
Total stockholders' deficit (1,423,182) (659,049)
------------- ----------
Total liabilities and stockholders' deficit $2,316,220 $2,874,296
============= ============
Note: The financial statements at June 30, 1996 have been derived from the
audited financial statements at that date but do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
Access Solutions International, Inc.
Condensed Statements of Operations
Three month period ending September 30,
Unaudited
1996 1995
Net Sales:
Products $162,797 $92,408
Services 140,338 142,496
------- -------
Total net sales 303,135 234,904
------- -------
Cost of Sales:
Products 20,312 48,430
Services 55,358 52,056
------ ------
Total cost of sales 75,670 100,486
------ -------
Gross profit 227,465 134,418
------- -------
Operating Expenses:
General and administrative expense 356,174 470,638
Research and development expense 420,175 567,965
Selling expense 136,336 245,246
------- -------
Total operating expenses 912,685 1,283,849
------- ---------
Loss from operations (685,220) (1,149,432)
--------- -----------
Other income and expenses:
Interest income 3,243 1,715
Interest expense (82,155) (33,787)
------- --------
Total other expenses (78,912) (32,072)
------- --------
Net Loss $ (764,132) $ (1,181,503)
=========== =============
Net loss applicable to common stock:
Net loss $ (764,132) $ (1,181,503)
Accrued dividends on preferred stock - (50,000)
------------ -------------
$ (764,132) $ (1,231,503)
============ =============
Net loss per common share $ (.51) $ (.82)
============ =============
Weighted average number of
common shares 1,511,865 1,501,152
See notes to unaudited condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
Access Solutions International, Inc.
Condensed Statements of Cash Flows
For the Quarters Ended September 30, 1996 and 1995
Unaudited
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net loss ($ 764,132) ($1,181,503)
----------- -----------
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 139,299 62,001
Provision for doubtful accounts -- (22,358)
Reverse compensation settlement associated with abandoned IPO -- 60,000
Changes in assets and liabilities:
(Increase) decrease in:
Trade accounts receivable 333,110 635,144
Inventories (15,988) (148,573)
Deposits -- (1,108)
Prepaid expenses and other current assets 11,385 14,228
Increase (decrease) in:
Accounts payable 271,340 (140,980)
Accrued expenses 36,102 (83,582)
Deferred revenue - Prepaid service contracts (129,771) (61,290)
------------ -----------
Total adjustments 645,477 313,482
----------- -----------
Cash used by operating activities (118,655) (868,021)
----------- -----------
Cash flows from investing activities:
Additions to fixed assets (96,012) (82,056)
Additions to other assets -- (6,169)
----------- -----------
Cash used for investing activities (96,012) (88,225)
----------- -----------
Cash flows from financing activities:
Proceeds from related party loans -- 948,000
Repayments of related party loans -- (556,578)
Proceeds from bridge loans 37,694 1,300,000
Repayments on capital lease obligations 40,690 (15,546)
Net (payments) borrowings under note payable-bank (50,000) --
Deferred financing costs (229,551) (168,940)
----------- -----------
Cash (used) provided by financing activities (201,167) 1,506,936
----------- -----------
Net (decrease)increase in cash (415,834) 550,690
Cash, beginning of period 537,831 148,842
----------- -----------
Cash, end of period $ 121,997 $ 699,532
=========== ===========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
Access Solutions International, Inc.
Notes to Unaudited Condensed Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed 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 Rule 10-01 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended September 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended June 30, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Access Solutions International, Inc.
prospectus (Form SB-2) dated October 16, 1996.
2. Note payable to bank
Indebtedness outstanding under a short-term bank loan was $240,000 at September
30, 1996. Interest was payable monthly at the bank's prime rate (8.25% at
September 30, 1996) plus 2%. The borrowings were secured by substantially all
assets of the Company. The loan required a reduction of principal in the amount
of $20,000 at each month end until October 31, 1996 when the balance was payable
in full. As a result of the variable attributes of this loan, the carrying
amount approximates fair value. This note payable obligation was paid in full on
October 25, 1996.
3. Initial Public Offering
On October 21, 1996, Access Solutions International, Inc. consummated an
initial public offering of 1,066,667 Units. Each Unit consisted of two shares of
Common Stock, $.01 par value per share ("Common Stock"), and one redeemable
common stock purchase warrant ("Redeemable Warrant"). The shares of Common Stock
and Redeemable Warrants comprising the Units are separately tradable commencing
upon issuance. An Over-Allotment Option to purchase an additional 160,000 Units
upon the same terms and conditions set forth above was exercised by the
Underwriter on October 29, 1996. An aggregate of 3,963,940 shares of Common
Stock were issued by the Company, resulting in net proceeds of $7,949,048.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's sales consist of sales of products and services. Products sold by
the Company consist of COLD systems, software and hardgoods including
replacement disk drives, subassemblies and miscellaneous peripherals. Services
rendered by the Company include post-installation maintenance and support. The
Company recognizes revenue from customers upon installation of COLD systems and,
in the case of COLD systems installed for evaluation, upon acceptance by such
customers of the products. The Company sells extended service contracts on the
majority of the products it sells. Such contracts are one year in duration with
payments received either annually in advance of the commencement of the contract
or quarterly in advance. The Company recognizes revenue from service contracts
on a straight line basis over the term of the contract. The unearned portion of
the service revenue is reflected as deferred revenue. As of September 30, 1996,
the Company had deferred revenue in the amount of $318,722.
The Company's operating results have in the past and may in the future fluctuate
significantly depending upon a variety of factors which vary substantially over
time, including industry conditions; the timing of orders from customers; the
timing of new product introductions by the Company and competitors; customer
acceleration, cancellation or delay of shipments; the length of sales cycles;
the level and timing of selling, general and administrative and research and
development expenses; specific feature needs of customers; and production
delays. A substantial portion of the Company's quarterly revenues are derived
from the sale of a relatively small number of COLD systems which range in price
from approximately $150,000 to $900,000. As a result, the timing of recognition
of revenue from a single product order has in the past and may in the future
have a significant impact on the Company's net sales and operating results for
particular financial periods. This volatility is counter balanced by the
increase in sales of annual service contracts which generally accompanies an
increase in systems sales. The revenue from service contracts is recognized on a
straight line basis over the term of the contract.
The Company's primary operating expenses include selling expenses, general and
administrative expenses and research and development expenses. General and
administrative expenses consist primarily of employee compensation and customer
support expenses. Research and development expenses include compensation paid to
internal research and development staff members and expenses incurred in
connection with the retention of independent research and development
consultants. The Company utilizes its own employees for research and development
functions except in certain circumstances involving product enhancements. In
those circumstances, the Company regularly retains independent experts to
consult and design new software modules which are subsequently evaluated and
tested by the Company's internal research and development staff. Upon successful
testing of such product enhancements, the Company's internal staff integrates
the new products with the Company's existing COLD systems and products.
The Company has historically incurred net losses and anticipates that further
net losses will be incurred prior to the time, if ever, that the Company
achieves profitability. However, the Company has recently taken certain steps
intended to limit the incurrence of future net losses. Such steps include: (i)
the retention in January 1996 of Hector D. Wiltshire as interim President and
Chief Executive Officer and the subsequent hiring in August 1996 of Robert H.
Stone as President and Chief Executive Officer; (ii) the recapitalization of the
Company in January 1996, consisting of a one-to-74 reverse stock split and the
conversion of certain debt and warrants into common stock; (iii) the November
l995 reduction in the Company's workforce from 52 to 30 full-time employees as
of September 30, 1996; (iv) other reductions in overhead costs and expenses; and
(v) the administration of tighter internal controls with respect to preservation
of the integrity of the Company's proprietary software products. The immediate
effect realized by the implementation of these measures was to reduce average
monthly operating expenses during the period from January through June 1996 to
approximately $317,000, exclusive of the cost associated with shares granted to
an officer in January 1996. During the first half of Fiscal 1996, average
operating expenses approximated $475,000 per month. While no assurance can be
given that such steps will be sufficient to limit losses which may be incurred
in the future, the Company believes that such steps, when fully implemented, may
enable the Company to realize improved operating results. The Company does not
believe that these steps, particularly the reduction in the workforce, have to
date or will in the future materially adversely impact the Company's revenues
and earnings. Of the 22 employees terminated, four were salespersons, five were
field support personnel, eight were product development personnel and five were
administrative staff. Many of the sales and field support employees had been
hired early in 1995 in anticipation of increased sales which did not
materialize. The terminated product development personnel were working on new
products which the Company determined would not be completed. As a result of the
foregoing, the reduction in workforce has not materially adversely affected the
Company's operations.
Results of Operations
The following discussion should be read in conjunction with the unaudited
condensed financial statements and notes thereto of Access Solutions
International, Inc. contained elsewhere herein.
Three Months Ended September 30, 1996 Compared to Three Months Ended September
30, 1995
Net Sales
Net sales for the three months ended September 30, 1996 was $303,135 compared
with $234,904 for the three months ended September 30, 1995, an increase of
$68,231 or 29%. The Company realized an increase in its product sales and a
decrease in peripheral sales. Product sales were $162,797 for the first quarter
of Fiscal 1997 compared with $92,408 for the first quarter of Fiscal 1996, an
increase of $70,389 or 76%. Product sales consisted of upgrades to existing
customer installations that had exceeded present data storage capacities and
revenue recognized in connection with software enhancements which added value to
a major customer's existing Gigapage software package. There were no upgrade
installations or software enhancements sold in the first quarter of Fiscal 1996.
Service revenues were $140,338 for the first quarter of Fiscal 1997 compared
with $142,496 for the first quarter of Fiscal 1996, a decrease of $2,157 or 2%.
The decrease in service revenues was due to the cancellation by two customers of
equipment maintenance contracts for obsolete hardware.
Cost of Sales
Cost of sales includes component costs, firmware license costs, labor, travel
and certain overhead costs. Costs of sales in the aggregate decreased 25% from
$100,486 for the three months ended September 30, 1995 to $75,670 for the three
months ended September 30, 1996, primarily due to greater sales of higher margin
hardware and software. In addition, cost of sales as a percentage of sales
decreased from 43% for the three months ended September 30, 1995 to 25% for the
three months ended September 30, 1996.
The cost of product sales decreased 58% from $48,430 for the three months ended
September 30, 1995 to $20,312 for the three months ended September 30, 1996 due
to sales of higher margin hardware and software. Cost of product sales as a
percentage of product sales decreased from 52% for the three months ended
September 30, 1995 to 12% for the three months ended September 30, 1996. This
decrease resulted from a significant portion of the product sales being for
software enhancement on installed systems for which costs have been recognized
in a prior period. The cost of services increased by 6% from $52,056 for the
three months ended September 30, 1995 to $55,358 for the three months ended
September 30, 1996. This modest increase reflects a conversion to post warranty
maintenance contracts as the Company's system installations age past one year.
Post warranty maintenance contracts are more costly because replacement parts
are no longer covered under the manufacturer's warranty. As a result, cost of
services as a percentage of service revenues increased from 37% for the three
months ended September 30, 1995 to 39% for the three months ended September 30,
1996.
Selling Expenses
Selling expenses for the three months ended September 30, 1996 decreased by
$108,910 or 44% from $245,246 to $136,336 for the three months ended September
30, 1995. The decrease was primarily the result of reduced payroll and related
expenses of approximately $75,000 due to reductions of two personnel in sales
and one person in marketing compared to September 1995 and approximately $26,000
for marketing expenses which were incurred during the three months ended
September 30, 1995 but not repeated since the Company was experiencing liquidity
problems in the first quarter of Fiscal 1997. As a result of the Company's
recent initial public offering, such liquidity problems have been alleviated and
the Company expects to increase its marketing activities in the last three
quarters of Fiscal 1997. See "Liquidity and Capital Resources."
General and Administrative Expenses
General and administrative expenses consist of administrative expenses and
customer support expenses. Administrative expenses decreased 24% or $114,463
from $470,638 for the three months ended September 30, 1995 to $356,174 for the
three months ended September 30, 1996. The decrease was primarily due to a
decrease in personnel related expenses consisting of salaries, benefits and
payroll from approximately $347,500 for the three months ended September 30,
1995 to approximately $220,000 for the three months ended September 30, 1996 due
to the termination in November 1995 of five administrative personnel, including
a Vice President of Business Operations. This decrease was partially offset by a
$41,500 increase in legal charges. The remaining reduction in administrative
expenses was incurred across most of the remaining administrative accounts as a
result of personnel reductions and tighter administrative controls.
Research and Development Expenses
Research and development expenses decreased by 26% or $147,790 from $567,965 for
the three months ended September 30, 1995 to $420,175 for the three months ended
September 30, 1996. The decrease resulted primarily from a decrease in personnel
related costs which was partially offset by increased depreciation charges
connected with the Company's renewal of a mainframe lease and higher mainframe
software license fees.
Other Revenue and Expenses
Other revenue and expenses consisted mainly of interest expense which increased
143% or $48,368 from $33,787 for the three months ended September 30, 1995 to
$82,155 for the three months ended September 30, 1996. This expense was a result
of an outstanding bank loan of approximately $220,000 and a bridge loan of
approximately $1,500,000, each of which were repaid in October 1996 from the
proceeds of the Company's initial public offering.
Net Loss
As a result of the foregoing, the Company's net loss decreased to $764,132 ($.51
per share) during the three months ended September 30, 1996 from $1,181,503
($.82 per share) for the three months ended September 30, 1995.
Liquidity and Capital Resources
The Company had a working capital deficit of $2,916,791 at September 30, 1996 as
compared to a working capital deficit of $1,971,091 at September 30, 1995.
Total cash used by operating activities during the three month periods
ended September 30, 1996 and 1995 was $118,665 and $868,021, respectively. The
Company's net losses for these periods were $764,132 and $1,181,503,
respectively. The major sources of capital for operating activities during the
three month period ended September 30, 1996 included an increase in accounts
payable of approximately $270,000 and a reduction of accounts receivable of
approximately $331,000 due to increased cash management activities.
Cash used by investing activities for the three month period ended September 30,
1996 and 1995 was $96,012 and $88,226, respectively, incurred primarily in
connection with the Company's mainframe lease.
Cash used by financing activities for the three month period ended September 30,
1996 was $201,167 and cash provided by financing activities for the three month
period ended September 30, 1995 was $1,506,936. The major use of cash for
financing activities during the three month period ended September 30, 1996 was
for increases in deferred financing costs in the amount of $229,551, consisting
of expenses that were temporarily capitalized until completion of the Company's
initial public offering in October 1996.
As of September 30, 1996, the Company had indebtedness outstanding under a
short-term secured bank loan in the amount of $240,000. The loan, originally in
the amount of $500,000, was subject to a $70,000 principal reduction in
September 1994 and further reductions of principal in the amount of $10,000 each
month thereafter until maturity. The loan was amended effective June 26, 1996 to
increase the monthly payments to $20,000 commencing July 31, 1996 and to extend
the maturity date to September 15, 1996. On September 18, 1996, the bank agreed
to further amend the loan extending the maturity date to October 31, 1996. The
loan, which was secured by substantially all of the Company's assets, was repaid
on October 21, 1996 with a portion of the net proceeds of the Company's initial
public offering.
As of September 30, 1996, the Company had indebtedness outstanding of $1,500,000
in promissory notes in connection with a bridge financing consummated by the
Company on May 28, 1996. The bridge notes bore interest at the rate of 10% per
annum and were due and payable upon the earlier of: (a) the closing of the sale
of securities or other financing of the Company from which the Company or its
subsidiaries receives gross proceeds of at least $2,500,000 or (b) May 28, 1997.
Principal and interest due were repaid to the holders of the promissory notes on
October 21, 1996 with a portion of the net proceeds of the Company's initial
public offering.
During October 1996, the Company completed its initial public offering of
1,066,667 Units (the "Units"), each Unit consisting of two shares of Common
Stock and one redeemable common stock purchase warrant. An additional 160,000
Units were sold to cover over-allotments. The Company's aggregate net proceeds
of the offering was approximately $8,000,000. Of these net proceeds,
approximately $1,500,000 were used to repay the Bridge Notes and accrued
interest thereon and approximately $240,000 was used to repay bank indebtedness
and accrued interest thereon. The Company intends to utilize the balance of the
net proceeds for research and development, significantly increased sales and
marketing programs and for general corporate purposes. The research and
development expenditures primarily consist of product modifications to support
multiple platforms, provide device independence and increase modularity to speed
enhancement, and for external contracting of general and vertical
market-specific software and additional development of enhancements for the
expansion of the Company's products to address the client/server market.
The Company has suffered recurring losses from operations, has negative cash
flows from operating activities and had a working capital deficiency as of June
30, 1996. As a result, the Company's independent accountants in their report
dated August 2, 1996 on the audited financial statements for the year ended June
30, 1996 included an explanatory paragraph that described factors raising
substantial doubt about the Company's ability to continue as a going concern.
The Company believes that the net proceeds of the initial public offering,
together with funds generated from operations, will be sufficient to meet the
Company's working capital requirements for a period of at least twelve months.
Thereafter, additional funds will be required. If the Company has insufficient
funds from operations, it will be required to seek additional debt or equity
financing. There can be no assurance that such additional funds can be obtained
on acceptable terms, if at all. If additional funds are not available, the
Company's business will be materially adversely affected.
The Company believes that its current corporate infrastructure can support
significant increases in sales without proportionate increases in costs.
However, there can be no assurances that sales will increase or that any cost
advantage will result.
Seasonality and Inflation
To date, seasonality and inflation have not had a material effect on the
Company's operations.
Forward Looking Statements
Statements contained in this Form 10-QSB that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company cautions that a
number of important factors could cause actual results for Fiscal 1997 and
beyond to differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company. Such statements contain a number
of risks and uncertainties, including, but not limited to, future capital needs,
uncertainty of additional funding, variable operating results, lenghthy sales
cycles, dependence on the Company's COLD system product, rapid technological
change and product development, reliance on single or limited sources of supply,
intense competition, recent turnover in management, the Company's ability to
manage growth, dependence on signification customers, dependence on key
personnel, and the Company's ability to protect its intellectual property. The
Company cannot assure that it will be able to anticipate or respond timely to
changes which could adversely affect its operating results in one or more fiscal
quarters. Results of operations in any past period should not be considered
indicative of results to be expected in future periods. Fluctuations in
operating results may result in fluctuations in the price of the Company's
securities.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. Amendment to Matthias Lukens employment agreement
27. Financial Data Schedule
(b) Reports on form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the issuer
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Access Solutions International, Inc.
Date: November 22, 1996 /s/Robert H. Stone
------------------------------------
Robert H. Stone
President and CEO
Date: November 22, 1996 /s/Denis L. Marchand
-------------------------------------
Denis L. Marchand
Corporate Controller and
Chief Accounting Officer
(Principal Accounting Officer)
Date: October 31, 1996
To: Matthius Lukens
Re: Employment agreement dated September, 1995
This letter confirms that the time in which you must notify ASI of your election
to terminate the above referenced employment agreement due to events that
occurred on January 2, 1996 has been extended through 4PM on November 30, 1996.
Sincerely
/s/Robert Stone
- ----------------------
Robert Stone
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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<CIK> 0000875385
<NAME> Access Solutions International, Inc.
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1996
<PERIOD-END> Sep-30-1996
<EXCHANGE-RATE> 1
<CASH> 121,997
<SECURITIES> 0
<RECEIVABLES> 142,999
<ALLOWANCES> 50,304
<INVENTORY> 531,216
<CURRENT-ASSETS> 796,717
<PP&E> 1,654,464
<DEPRECIATION> 1,102,812
<TOTAL-ASSETS> 2,316,220
<CURRENT-LIABILITIES> 3,713,508
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0
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<COMMON> 15,119
<OTHER-SE> 10,599,720
<TOTAL-LIABILITY-AND-EQUITY> 2,316,220
<SALES> 303,195
<TOTAL-REVENUES> 303,195
<CGS> 75,670
<TOTAL-COSTS> 75,670
<OTHER-EXPENSES> 685,220
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,155
<INCOME-PRETAX> (764,132)
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