<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended
December 31, 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 _______________
UNIVERSAL SELF CARE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4228470
- ---------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11585 Farmington Road
Livonia, Michigan 48150
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (313) 261-2988
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value
(Title of Class)
Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
----- -----
The number of shares outstanding of the registrant's Common Stock, $.0001
Par Value, as of December 31, 1996 was 7,889,706 shares.
<PAGE>
UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
Number
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet - December 31, 1996
and June 30, 1996 3
Consolidated Statement of Operations - For the three
months and the six months ended December 31, 1996
and 1995 4
Consolidated Statement of Cash Flows - For the
three months ended December 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6 - 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION 9 - 11
PART II - OTHER INFORMATION 11
SIGNATURE 12
<PAGE>
UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
ASSETS 1996 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 87,223 $ 91,066
Accounts receivable, net allowance for doubtful accounts
of $2,044,000 and $2,007,000, respectively 11,073,580 10,200,373
Inventories 616,104 551,154
Prepaid expenses 243,484 136,036
--------------- --------------
TOTAL CURRENT ASSETS 12,020,391 10,978,629
PROPERTY AND EQUIPMENT
net of accumulated depreciation of $497,881 and $354,361, respectively 966,702 972,334
INTANGIBLE ASSETS
net of accumulated amortization of $708,799 and $532,771, respectively 6,026,419 6,201,901
DEPOSITS AND OTHER ASSETS 50,285 56,204
--------------- --------------
$ 19,063,797 $ 18,209,068
--------------- --------------
--------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,522,997 $ 6,694,173
Notes payable - current portion 1,658,406 300,259
Related party loans 60,000
Accrued liabilities 1,091,473 1,632,911
State audit reserves 1,400,000 1,400,000
Payroll taxes payable 7,922 594,318
--------------- --------------
TOTAL CURRENT LIABILITIES 8,680,798 10,681,661
LONG TERM NOTES PAYABLE, net of current portion 826,993 2,315,469
REVOLVING CREDIT LOAN 4,538,538 -
REDEEMABLE PREFERRED STOCK, Series A 2,064,051 2,246,209
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, Series B Cumulative Convertible, $.0001 par value,
10,000,000 shares authorized, 1,580,000 shares issued and outstanding 505,000 505,000
Common stock, $.0001 par value, 20,000,000 shares authorized, 7,889,706 shares
issued and outstanding as of December 31, 1996. 789 788
Additional paid-in capital 10,623,796 10,623,796
Retained earnings/(deficit) (8,176,168) (8,163,855)
--------------- --------------
TOTAL STOCKHOLDERS' EQUITY 2,953,416 2,965,729
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,063,797 $ 18,209,068
--------------- --------------
--------------- --------------
</TABLE>
See notes to consolidated financial statements.
Page 3 of
<PAGE>
UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended December 31, Six months ended December 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 9,256,398 $ 9,243,706 $ 18,468,964 $ 18,457,550
COST OF GOODS SOLD 5,340,614 5,746,345 10,704,437 11,400,648
-------------- -------------- ---------------- -------------
GROSS PROFIT 3,915,784 3,497,361 7,764,526 7,056,902
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,471,112 3,498,426 7,283,785 6,772,037
-------------- -------------- ---------------- -------------
OPERATING INCOME/(LOSS) 444,672 (1,065) 480,742 284,865
OTHER EXPENSES:
Amortization and write-off of finance costs 23,488
Interest expense, net 184,723 178,932 385,215 407,515
-------------- -------------- ---------------- -------------
NET INCOME/(LOSS) $ 259,949 $ (203,485) $ 95,527 (122,650)
-------------- -------------- ---------------- -------------
-------------- -------------- ---------------- -------------
NET INCOME/(LOSS) PER SHARE $ 0.02 $ (0.05) $ 0.00 (0.04)
-------------- -------------- ---------------- -------------
-------------- -------------- ---------------- -------------
WEIGHTED AVERAGE NUM-
BER OF SHARES USED IN 7,889,706 6,594,280 7,889,706 6,464,224
COMPUTATION
</TABLE>
See notes to consolidated financial statements.
Page 4 of
<PAGE>
UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 95,527 $ (122,650)
--------------- -------------
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization 319,528 245,711
Changes in operating assets and liabilities:
(Increase) in accounts receivables (873,207) (536,622)
(Increase) decrease in inventories (64,950) 472,090
(Increase) in prepaid expenses (107,448) (632,614)
Decrease (increase) in deposits and other assets 5,919 66,031
(Increase) in intangible assets - (111,393)
(Decrease) in accounts payable (2,171,176) 89,315
(Decrease) in accrued liabilities (541,438) (110,927)
(Decrease) in payroll taxes payable (586,396) -
--------------- -------------
Total adjustments (4,019,168) (518,409)
--------------- -------------
NET CASH (USED IN) OPERATING ACTIVITIES (3,923,640) (641,059)
--------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (138,413) (141,977)
Net cash paid for acquisitions - (150,000)
--------------- -------------
NET CASH (USED IN) INVESTING ACTIVITIES (138,413) (291,977)
--------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of related party loans (60,000) (200,000)
Borrowing of revolving credit line 4,538,538 37,000
Repayment of revolving credit line - -
Issuance of common stock, net of expenses - 485,479
Issuance of note payable, net of discount - 1,783,972
Net proceeds from (repayment of) long-term debt (130,329) (848,157)
Dividends paid on Series A Preferred Stock (107,840) (103,681)
Redemption of Series A Preferred Stock (182,158) (41,320)
--------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,058,211 1,113,293
--------------- -------------
NET INCREASE (DECREASE) IN CASH (3,843) 180,257
CASH AT BEGINNING OF PERIOD 91,066 87,853
--------------- -------------
CASH AT END OF PERIOD $ 87,223 $ 268,110
--------------- -------------
--------------- -------------
</TABLE>
See notes to consolidated financial statements.
Page 5 of
<PAGE>
UNIVERSAL SELF CARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - DECEMBER 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
Reference is made to the annual report on form 10-KSB/A of Universal Self
care, Inc. (The "Company") dated October 15, 1996 for the year ended June 30,
1996.
The accompanying financial statements reflect all adjustments which, in the
opinion of management, are necessary for a fair presentation of financial
position and the results of operations for the interim periods presented.
Except as otherwise disclosed, all such adjustments are of a normal and
recurring nature. The results of operations for any interim period are not
necessarily indicative of the results attainable for a full fiscal year.
2. EARNINGS/(LOSS) PER SHARE
Earnings/(loss) per share are based on the weighted average number of
common shares and common share equivalents outstanding during the period after
giving effect for preferred stock dividends during the period.
3. CONTINGENCIES
The Company has undergone an audit by representatives of the State of
California, State Controller's Office, Division of Audits. The purpose of the
audit was to determine the level of the Company's compliance with the guidelines
of the California Department of Health Services (Medi-Cal) and the California
State Board of Equalization. Representatives from the State Controller's Office
have raised the issue of whether the Company may have practiced two-tier pricing
policies in the charges to it's customers which are not in conformance with
Medi-Cal regulations. Under such regulations, a company may not charge any
customer prices less than those charged to the Medi-Cal program. Based upon
Management's independent review, the Company maintains that it has conformed
with pricing regulations because its prices are consistent within each of its
operating subsidiaries, Sugar Free and Home Therapy, and because these two
subsidiaries are offering different services. The Company's Management further
believes that the Medi-Cal program was charged the "prevailing prices" charged
for supplies, and that those charges were in compliance with current
regulations, and that the Representatives from the Controller's Office compared
prices for different services with different delivery methods. The State
Controller's Office contends that the reimbursement was paid for products, and
not for services, so the difference in pricing was not warranted based upon the
services rendered in conjunction with the products delivered. In July 1994, the
State Controller's Office issued an Auditor's Report with findings to the
Department of Health Services ("DHS") for the period beginning July 1, 1990
through June 30, 1993. The Report recommends a recovery of approximately $1.3
million due to such
<PAGE>
alleged two-tier pricing. In November 1994 the State Controller's Office issued
Letter of Demand for the recovery of such amounts due. In November 1994, the
Company appealed the audit determination made by the State Controller's Office.
In January 1996 a hearing was held before an Administrative Law Judge. In July
1996 the Judge recommended that the overpayment determination be upheld. In
August 1996 the DHS adopted the recommendation of the Law Judge as the final
decision of the Director of DHS. In January 1997 the Company filed an appeal to
the decision with the Superior Court for the County of Los Angeles. The Company
intends to vigorously contest any recovery by the State with respect to such
alleged improper pricing practices for services rendered.
The Company has also undergone an audit by the California State Board of
Equalization ("SBE") as a result of separate findings made by the State
Controller's Office. The SBE has disagreed with the Company's policies
regarding its sales tax payments on certain items. Based upon Management's
independent review, the Company has maintained that sales of diabetes supplies,
when made pursuant to a doctor's prescription, are transactions exempt from the
collection and payment of sales taxes in California. The SBE has indicated that
only sales of insulin and insulin syringes are exempt from California sales tax
and that blood glucose meters, testing strips and finger-prick lancets are
taxable items. The SBE has assessed sales tax on the sales of these items and
it has issued a Notice of Determination against the Company for unpaid sales tax
covering the period July 1, 1989 through September 30, 1993. The Notice
determined a total amount due of $790,834, which is comprised of taxes due in
the amount of $691,695, and interest due through September 30, 1993 in the
amount of $99,139. The Company has protested these findings and is in the
process of appealing this assessment. A hearing scheduled for November 13, 1996
was postponed so that the SBE settlement department could review the Company's
appeal. In addition to the above defenses, the Company maintains that a portion
of the revenues earned form the sale of diabetic supplies were non-taxable
services rendered as a separate and distinct charge. The SBE settlement
department disagrees with this position, but it had expressed a willingness to
settle this matter for a negotiated payment. Management believes that it would
be in the best interest of the Company to arrive at a final negotiated
settlement, however, the Company is prepared formally to appeal the assessment
if necessary. The Company has accrued an additional $75,728 in fiscal 1996 for
possible interest payments on the sales tax amount in question. The total
accrual for interest and penalty payments as of December 31, 1996 was $228,477.
The Company has accrued and paid sales taxes on sales of the items in question
during all periods since the last day of the period under audit. Such sales
taxes amounted to approximately, $759,143 during the fiscal year ended June 30,
1996 and $340,601 during the 1996 Six Month Period.
Based upon the above contingencies, the Company has provided reserves, in
the event that a defense of its positions does not prevail, of $950,000 during
the fiscal year ended June 30, 1994 ($50,000 of which was deposited with SBE in
connection with its audit) and of an additional $500,000 during the fiscal year
ended June 30, 1995. Based upon Management's independent review, no addition
to the reserves during 1996 was determined to be appropriate. The combined
maximum amount demanded to be paid under both these actions is approximately
$2,090,830. Based upon the defenses involved, Management's independent
<PAGE>
review, and information supplied by the Company's counsel and outside
consultants, the Company's Management believes that an estimated combined
settlement amount for these actions equal to $1,450,000, or 69% of the maximum
amount demanded, is reasonable under the circumstances. In addition to the
reserve, $228,000 of accrued interest has been recorded in connection with
these matters. Allocation of the total reserve of $1,450,000 between the DHS
and the SBE actions is not possible because, in the event of a settlement with
DHS, the amount of the liability with the SBE could be favorably impacted. The
total reserve of $1,450,000 plus accrued interest is considered adequate at
this time to cover any anticipated settlements relating to these matters.
The Company has undergone an audit by Medicare covering the charges submitted
for reimbursement in the Western region (Region D) during the period January 1,
1994 through December 31, 1995. Medicare determined that an overpayment to the
Company may have occurred as a result of the use of a superseded diagnosis code
on claims submitted. The claims in question were originally submitted to
Medicare in order to gain a denial of charges so that an alternative carrier
could be validly billed, since a denial is required by certain intermediaries
prior to billing for certain charges. Medicare may have inappropiately made
reimbursements on these charges. In November 1996 Medicare issued a demand for
refund of $795,702 plus interest of $17,738. Company management feels that
the ultimate settlement to Medicare will not have a material impact on earnings
since an alternative intermediary will be responsible for any amounts due.
4. REVOLVING LINE OF CREDIT
In August, 1996 the Company entered into an accounts receivable funding
agreement with HealthCarepartners Funding, L.P. ("Healthpartners") under which
the Company is able to borrow up to $4,400,000 against its qualified accounts
receivable. Qualified accounts are generally defined as those which are less
than 91 days old and are due from a third-party payee source (ie. Medicare,
Medicaid or Commercial insurance carrier) as opposed to those that are payable
directly by patients. The term of the agreement is three years. Outstanding
principal under the agreement is secured by a first priority lien against
substantially all of the Company's assets.
On August 30, 1996, the Company transacted for the initial draw under this
agreement, the maximum available amount of $3,000,000. Substantially all such
funds were immediately expended by the Company for the repayment of past due
payroll taxes, past due accounts payable and certain short-term notes payable.
On November 4, 1996, the Company's Loan and Security Agreement with
HealthCarepartners Funding, L.P. ("Healthpartners") was amended by, among other
things, adjusting the Base Rate of interest to equal 2.2% above the prime rate,
increasing funding under the loan to $4.4 million and providing for the creation
of a sole purpose subsidiary of the Company to be responsible for marketing and
managing all of the Company's managed care contracts ("Newco"). Under the
amended agreement, Healthpartners received warrants to acquire 5% of the
outstanding common stock of Newco, subject to anti-dilution protection,
<PAGE>
registration rights and redemption provisions. Healthpartners also received a
warrant to acquire 375,000 shares of Company Common stock at an exercise price
of $2.50.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED DECEMBER 31, 1996 (THE "1996 THREE MONTH PERIOD") as
COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1995 (THE "1995 THREE MONTH
PERIOD")
Revenue for the 1996 Three Month Period was $9,256,398, an increase of
$12,692, or a one percent from the 1995 Three Month Period. A contributing
factor was that customer refunds in the 1996 Three Month Period were $6,285, an
decrease of $43,030 from the 1995 Three Month Period.
Total cost of goods sold during the 1996 Three Month Period were
$5,340,614, representing costs of approximately 58% of revenue for the period,
while total cost of goods sold for the 1995 Three Month Period were $5,746,345
or approximately 62% of revenue. This four point improvement is in part the
result of favorable packaging cost. Total cost of packaging during the 1996
Three Month Period were $14,091, compared to $28,313 for the 1995 Three Month
Period, or a decrease of 100%. This decrease is the result of a automated
shipping manifest system that was installed in the Company's second quarter to
both reduce costs and increase distribution efficiency. Additionally, improved
pricing agreements with several vendors has been a contributing factor in the
decrease in cost of goods.
Selling, general and administrative expenses during the 1996 Three Month
Period decreased to $3,471,112 or 37% of revenue, as compared to $3,498,426 or
38% of revenue during the 1995 Three Month Period. Accrual for bad debt expense
for the 1996 Three Month Period is 2% of revenue, as compared to the 1995 Three
Month Period which was less than 1% of revenue. The combined costs of payroll
and fringe benefits, including sales commissions, decreased by 3% during the
1996 Three Month Period over the 1995 Three Month Period.
Other expenses include late fees and finance charges, which decreased by
$54,832 during the 1996 Three Month Period over the 1995 Three Month Period.
This decreases was primarily due to the removal of $77,169 in IRS penalties
Net income for the 1996 Three Month Period of $259,949 is primarily
attributable to the favorable cost of good sold experience and the reduction in
selling, general and administrative expenses as well as favorable adjustment in
late fees and finance charges.
THE SIX MONTHS ENDED DECEMBER 31, 1996 (THE "1996 SIX MONTH PERIOD") as COMPARED
TO THE SIX MONTHS ENDED DECEMBER 31, 1995 (THE "1995 SIX MONTH PERIOD")
<PAGE>
Revenue for the 1996 Six Month Period was $18,468,964, a increase of
$11,414, or less than one percent from the 1995 Six Month Period. A
contributing factor was that customer refunds in the 1996 Six Month Period were
$340,601, an decrease of $73,343 from the 1995 Six Month Period.
Total cost of goods sold during the 1996 Six Month Period were $10,704,437,
representing costs of approximately 58% of revenue for the period, while total
cost of goods sold for the 1995 Six Month Period were $11,400,648 or
approximately 62% of revenue. This four point improvement is in part the result
of a volume discount from a vendor in the amount of $77,383 which covered a
three month period of time, April through June 30, 1996 and $25,933 for the
month of July which were both recorded during the 1996 Six Month Period. The
volume discounts will continue throughout the 1997 fiscal year to the extent
that the Company meets specified purchasing levels. Additionally, improved
pricing agreements with several vendors has contributed to the improved margin
on sales and a reduction in the Company's shipping and packaging costs by
utilizing a new vendor for the distribution of our products .
Selling, general and administrative expenses during the 1996 Six Month
Period increased to $7,283,785 or 39% of revenue, as compared to $6,772,037 or
37% of revenue during the 1995 Six Month Period. Accrual for bad debt expense
for the 1996 Six Month Period is 2% of revenue, as compared to the 1995 Six
Month Period which was approximately 1% of revenue. The combined costs of
payroll and fringe benefits, including sales commissions, increased by 1% during
the 1996 Six Month Period over the 1995 Six Month Period.
Other expenses include late fees and finance charges, which increased by
$47,929 during the 1996 Six Month Period over the 1995 Six Month Period. These
increases were primarily due to interest charged by vendors.
Net income for the 1996 Six Month Period of $95,527 is primarily
attributable to the profits from operations, in the amount of $480,742 which
were sufficient to support debt service costs in the total amount of $385,215.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Company had working capital of $3,339,593,
compared to working capital of $296,968 at June 30, 1996. The increase in
working capital during the Six Month Period is primarily due to increases in
long-term borrowing as described below and to income from operations.
Cash used by operations during the 1996 Six Month Period was $3,923,641 as
compared to cash used by operations of $641,059 during the 1995 Six Month
Period. This increase is primarily due to required reductions in account
payables and accrued liabilities.
On August 30, 1996, the Company made its first borrowings under a Loan and
Security Agreement, dated as of August 15, 1996 (the "Loan Agreement"), by and
among the Company
<PAGE>
and HealthCarePartners Funding, L.P. ("HealthPartners"). Such initial loan was
in the aggregate principal amount of $3,000,000, of which approximately $101,000
was utilized to pay a portion of the breakage costs under a prior financing
agreement, $200,000 was utilized to repay a short-term outstanding loan and the
balance was utilized to pay past-due payroll taxes, certain accounts payable and
accrued expenses.
Pursuant to the Loan Agreement with HealthPartners, the Company may receive
revolving credit advances in an amount not to exceed the lesser of (a) 80% of
the qualified accounts receivable of the Company, or (b) $4,500,000. All loans
and other obligations under the Loan Agreement are secured by a first priority
lien and security interest in all accounts receivable of the Company. The Loan
Agreement was amended to contain a financial covenant which required that the
Company's net loss not exceed $50,000 for its quarter ended September 30, 1996,
and requires it to achieve net income of at least $500,000 for its fiscal year
ending June 30, 1997. The Company was in default under the covenant concerning
the achievement of net income for the quarter ending September 30, 1996 and this
default has been waived by Healthpartners.
In connection with the transactions pursuant to the Loan Agreement with
HealthPartners, the Company entered into an agreement with Fred Kassner, to
whom the Company remains indebted in the approximate amount of $1,474,000 (which
is due and payable on July 14, 1997). Pursuant to such agreement, Mr. Kassner
has agreed to subordinate his lien on the accounts receivable of the Company to
the lien and security interest held by HealthPartners in such collateral. In
addition, in consideration of Mr. Kassner's waiver of certain events of default
under his loan agreement with the Company (such events of default consisting of
the Company's failure to make certain mandatory prepayments out of the proceeds
received by the Company from certain exercises of the Company's common stock
purchase warrants), the Company issued to Mr. Kassner five-year warrants
entitling Mr. Kassner to purchase up to 100,000 shares of common stock of the
Company at an exercise price of $2.50 per share. Mr. Kassner has a pledge of
all the outstanding stock of each of the Company's operating subsidiaries to
further secure the Company's outstanding indebtedness to him.
PART II - OTHER INFORMATION
5. Exhibits and reports on form 8-K
(a) Exhibits - None
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
it's behalf by the undersigned, thereunto duly authorized.
UNIVERSAL SELF CARE, INC.
BY:
-------------------
BRIAN BOOKMEIER
PRESIDENT
Date: February 13, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 87,223
<SECURITIES> 0
<RECEIVABLES> 13,117,580
<ALLOWANCES> (2,044,000)
<INVENTORY> 616,104
<CURRENT-ASSETS> 12,020,391
<PP&E> 966,702
<DEPRECIATION> (497,881)
<TOTAL-ASSETS> 19,063,797
<CURRENT-LIABILITIES> 8,680,799
<BONDS> 0
2,064,051
505,000
<COMMON> 789
<OTHER-SE> 2,447,628
<TOTAL-LIABILITY-AND-EQUITY> 19,063,797
<SALES> 18,468,964
<TOTAL-REVENUES> 18,468,964
<CGS> 10,704,437
<TOTAL-COSTS> 10,704,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 360,000
<INTEREST-EXPENSE> 385,215
<INCOME-PRETAX> 95,527
<INCOME-TAX> 0
<INCOME-CONTINUING> 95,527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0
</TABLE>
