SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
Mark One
|X| OUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1997
OR
|_| TRANSITION REPORT PURSUANDT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from period from ______ to _______
Commission File Number 0-21816
INFINITE MACHINES CORP.
(Exact name of Registrant as specified in its charter)
Delaware 52-1490422
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R. S. Employer
of organization) Identification No.)
300 Metro Center Boulevard, Warwick, RI 02886
---------------------------------------------
(Address of principal executive office) (Zip Code)
(401) 737-7900
(Registrant's telephone number, including area code)
Indicate by check mark 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 (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 |_|
As of August 06, 1997 the Registrant had a total of 10,241,121 shares of Common
Stock, $.001 par value, outstanding.
<PAGE>
INDEX
INFINITE MACHINES CORPORATION
PART 1. FINANCIAL INFORMATION
Page
----
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations - Three
and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1997 and 1996 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 7-11
PART II. OTHER INFORMATION
Items
1-6 Not Applicable
SIGNATURES
2
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 437,673 $ 1,147,791
Restricted funds 15,787 68,601
Accounts receivable, net of allowances 876,208 741,539
Inventories 163,193 138,893
Other current assets 150,935 150,830
------------ ------------
Total current assets 1,643,796 2,247,654
Property and equipment, net 4,948,795 4,303,838
Other Assets
Notes receivable - stockholders 117,360 132,258
Purchased technology, net 1,134,584 1,389,367
Inventoried parts 107,404 143,206
Other intangible assets, net 583,580 443,346
------------ ------------
1,942,928 2,108,177
------------ ------------
$ 8,535,519 $ 8,659,669
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 653,187 $ 250,000
Accounts payable and accrued expenses 1,149,114 952,864
Current portion of litigation settlement payable 175,000 549,000
Current maturities of long-term obligations 245,191 245,187
------------ ------------
Total current liabilities 2,222,492 1,997,051
Long term obligations 4,461,662 3,984,557
Litigation settlement payable 100,000 100,000
Minority interest 635,408 476,591
Stockholders' equity:
Common stock, $.001 par value, 20,000,000
shares authorized, 9,240,869 and 8,693,162
shares issued and outstanding 9,239 8,694
Additional paid-in capital 16,067,285 15,067,120
Accumulated deficit (14,960,567) (12,974,344)
------------ ------------
Total stockholders' equity 1,115,957 2,101,470
------------ ------------
$ 8,535,519 $ 8,659,669
============ ============
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- ------------------------
1997 1996 1997 1996
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sales $ 1,574,818 $ 1,291,757 2,935,217 $ 2,594,592
Cost of goods sold 836,361 837,578 1,668,913 1,623,414
----------- ----------- ---------- -----------
Gross profit 738,457 454,179 1,266,304 971,178
Costs and expenses
Operating expenses 41,215 21,779 59,923 55,217
Research and development 464,033 -- 976,273 --
General and administrative expenses 531,960 345,043 1,128,966 688,197
Selling expenses 140,595 132,310 270,676 249,384
Depreciation and amortization 253,706 151,142 547,196 305,260
----------- ----------- ---------- -----------
Total costs and expenses 1,431,509 650,274 2,983,034 1,298,058
Operating loss (693,052) (196,095) (1,716,730) (326,880)
Other income (expense)
Interest and dividend income 11,589 11,895 21,470 11,902
Interest expense (517,930) (144,506) (605,786) (233,538)
Minority interest in net loss of subsidiary 60,068 -- 262,183 --
Gain on sale of technology -- -- 38,064 --
Other income 14,576 41,874 14,576 46,038
----------- ----------- ---------- -----------
Total other income (expense) (431,697) (90,737) (269,493) (175,598)
Loss before provision for income taxes (1,124,749) (286,832) (1,986,223) (502,478)
Provision for income taxes -- 9,338 -- 21,000
----------- ----------- ---------- -----------
Net loss $(1,124,749) $ (296,170) (1,986,223) $ (523,478)
=========== =========== ========== ===========
Per share:
Net loss per common share (0.14) $ (0.05) (0.24) $ (0.09)
=========== =========== ========== ===========
Weighted average number of common
shares outstanding 8,195,849 5,574,563 8,195,849 5,574,563
=========== =========== ========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,986,223) $ (523,478)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 547,196 305,260
Interest expense attributable to convertible
debentures discount 406,849 60,222
Gain of dispositions of assets (38,064) --
Minority interest in net loss of subsidiary (262,183)
Asset write-downs and allowances 14,898 9,684
Changes in assets and liabilities:
(Increase) decrease in assets
Accounts receivable (134,669) 78,711
Other assets (25,539) 5,292
Inventory and inventoried parts 11,502 46,272
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (177,750) (51,261)
----------- -----------
Net cash used in operating activities (1,643,983) (69,298)
Cash flows from investing activities:
Purchase of property and equipment (944,143) (146,561)
Proceeds from sale of technology 155,898 --
----------- -----------
Net cash used in investing activities (788,245) (146,561)
Cash flows from financing activities:
Proceeds from convertible debentures, net of expenses 968,000 3,764,000
Borrowings of long term debt -- 1,250,000
Net borrowings (repayments) of short term debt 403,187 (131,932)
Repayments of long term obligations (122,891) (1,363,551)
Decrease in restricted funds, net 52,814 54,025
Proceeds from issuance of subsidiary preferred stock, net
of expenses 421,000 --
Proceeds from issuances of common stock -- 180,093
----------- -----------
Net cash provided by financing activities 1,722,110 3,752,635
Net increase (decrease) in cash and cash equivalents (710,118) 3,536,776
Cash and cash equivalents - beginning of period 1,147,791 24,702
----------- -----------
Cash and cash equivalents - end of period $ 437,673 $ 3,561,478
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Infinite Machine Corp.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. 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 of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. For further information,
refer to the Company's Annual Report on Form 10-KSB for the year ended December
31, 1996, which includes audited financial statements and footnotes as of and
for the years ended December 31, 1996 and 1995.
NOTE 2. - CONVERTIBLE PROMISSORY NOTES
As of June 30, 1997, $100,000 of 7% convertible debentures due July 2000
were outstanding. The holder may, at his or her sole option, convert all or any
part of the outstanding principal amount and accrued and unpaid interest of this
note into that number of shares of the common stock of the Company, par value
$.001, as is equal to such amount then being converted divided by 80% of the
average closing price of the Company's common stock on the ten trading days
preceding conversion.
On February 24, 1997, the Company completed an additional $1,100,000
private placement financing through the sale of 6% convertible debentures due
December 31, 1998. The holders may, at their sole option during the period
commencing 120 days after the date of issuance, convert all or any part of the
outstanding principal amount and accrued and unpaid interest of these notes into
that number of shares of the common stock of the Company, par value $.001, as is
equal to such amount then being converted divided by 73% of the average closing
price of the Company's common stock on the five trading days preceding
conversion. As of June 30, 1997, none of the related debentures had been
converted into common stock of the Company.
NOTE 3. - INTEREST EXPENSE ON BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE
DEBENTURES
The Securities Exchange Commission (the "SEC") staff recently adopted a
new position on accounting for convertible debt instruments which are
convertible at a discount to market. The Company had previously accounted for
the interest on its convertible debt instruments based upon the coupon rate. In
a letter dated March 13, 1997, to the Emerging Issues Task Force of the
Financial Accounting Standards Board, the SEC expressed that they believe that a
beneficial conversion feature on convertible debt instruments should be
recognized and measured by allocating a portion of the proceeds equal to the
intrinsic value of that feature to additional paid-in capital. The intrinsic
value is calculated at the date of issue as the difference between the
conversion price and the fair value of the Company's common stock, multiplied by
the number of shares into which the debentures are convertible. This discount
resulting from the allocation of the proceeds increases the effective interest
rate of the security and should be reflected as a charge to interest expense.
The amortization period of the interest discount is from the date of the
issuance of the security to the date it first becomes convertible. For the three
and six month periods ended June 30, 1997, interest expense has been recognized
for this discount in the amount of $406,849.
NOTE 4. - EFFECT OF NEWLY ISSUED ACCOUNTING PRONOUNCEMENT
Statement of Financial Accounting Standard No. 128 - "Earnings Per Share"
has recently been issued. This pronouncement simplifies the calculation of
earnings per share (EPS), which now requires two amounts of EPS to be disclosed:
basic EPS and diluted EPS. The effective date of this pronouncement is for
periods ending after December 15, 1997, and early application is not permitted.
The basic and diluted EPS computed pursuant to the new pronouncement would have
been the same as the EPS calculation as currently presented for the three and
six month periods ended June 30, 1997 and 1996.
6
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements expressed or implied by such forward-looking statements. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward looking statements
included in this Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein
particularly in view of the Company's early stage operations, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
GENERAL
Infinite Machines Corp., (the "Company") has two main operating
subsidiaries; Laser Fare, which is wholly owned and was acquired in July 1994
for stock, and Spectra Science, which was formed in August 1996 and is 63% owned
by the Company. Additionally, Infinite has two operating divisions of Laser
Fare, Advance Technology Group ("ATG"), engaged in contract research and
development, and ExpressTool Corp., ("ExpressTool"), created to exploit new
rapid tooling technology.
Laser Fare
Laser Fare operations continue to be profitable. Approximately 75% of
Laser Fare's sales comes from customers in the medical device, aerospace and
power generation industries. Customers include General Electric, United
Technologies, Allied Signal, Polaroid, Stryker Medical and Center Laboratories.
In addition to an expected twenty percent growth rate from established
customers, it is anticipated that several newer customers will increase their
activity in 1997. Laser Fare has sufficient facilities and equipment to support
this planned short-term expansion.
Spectra Science
Spectra Science was created to commercialize technology licensed from
Brown University on an exclusive worldwide basis. The LaserPaint(TM) technology
allows common, disordered materials to be generators of laser light. In addition
to the licensed
7
<PAGE>
technologies, Spectra has developed "Quantum Dot Phosphors" and, in parallel, a
new lasing display technology which holds promise in the area of high definition
and projection video displays.
Though the potential applications for LaserPaint(TM) are numerous, Spectra
is currently focusing its efforts on three areas: Photodynamic Therapy (PDT);
Identification and Coding; and Document Security. In PDT, which is rapidly
emerging as a treatment modality for a number of cancers, the LaserPaint(TM)
technology addresses the industry's need for a tunable, low cost and disposable
excitation source. On June 18, 1997, Spectra Science received positive results
from a first round of invivo tests performed at the Ontario Cancer Institute by
Dr. Brian Wilson and Dr. Lothar Lilge. The tests were aimed at comparing the
efficacy of Spectra's low-cost disposable light source with a costly,
high-maintenance dye laser for use in photodynamic therapy with the only FDA
approved product. In the area of coding, Spectra has developed a nylon
thread-based label to be used in conjunction with LaserPaint(TM) for the rental
garment and linen industry. Spectra successfully debuted its patented laser
thread identification system at the "Clean Show '97", the biennial meeting of
the World Educational Congress for Laundering and Drycleaning, in Las Vegas,
Nevada. Spectra's breakthrough technology is the solution to an annual
billion-dollar problem in both the textile rental and industrial linen
industries. Attendees included linen and garment manufacturers and distributors
as well as institutional and industrial users and launderers.
Document security processes using LaserPaint(TM) technology have resulted
in Spectra Science signing a licensing and Research & Development agreement with
Crane & Company Inc., manufacturer of U. S. currency paper.
ExpressTool
ExpressTool is building molds, using its proprietary processes, for a
number of Fortune 500 industrial companies. Its technical capabilities allow
molds, cavities and other types of tools to be made more rapidly than is
currently possible with traditional methods. It has been found that the
ExpressTool's molds can be operated more rapidly than conventional tools, a
major benefit for the user. The technology was developed over the last few years
under a collaborative R&D agreement with a major industrial company. Laser Fare
has exclusive rights to the technology for all industries other than the markets
its industrial partner competes in. Management is currently searching for
organizations having the needed capabilities that can be combined, through
acquisition or some other business arrangement, to integrate ExpressTool's new
technology with their established infrastructure and business base.
Advanced Technology Group
During the second quarter ending June 30, 1997, Laser Fare's Advance
Technology Group, ("ATG"), was awarded a $500,000 follow-on contract by the
United States Air Force/Phillips Laboratory, Kirtland AFB, New Mexico. The
contract will focus on the continued development of direct materials processing
applications and the commercialization of novel high power, high-brightness
Laser diode technology, jointly
8
<PAGE>
developed by Laser Fare and the A. F. Joffe Physico-Technical Institute, St.
Petersburg, Russia. The grant will enable Laser Fare to complete the
commercialization of new high power high brightness diode technology for a
variety of applications, including materials processing. This program is
expected to lead to the introduction of high-brightness diode lasers in a wide
variety of commercial applications such as marking, micro-welding,
micro-machining and desktop rapid prototyping and machining.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its product development activities through a
series of private placements of debt, equity securities and through the October
1993 public offering of its common stock. From inception, through June 30, 1997,
an aggregate of approximately $15.1 million, net of expenses, has been provided
by debt and equity offerings. As of June 30, 1997 the Company has cash, cash
equivalents and marketable securities totaling approximately $437,673 available
for its working capital needs and planned capital asset expenditures.
While revenues were realized in the six months ending June 30, 1997, the
majority of revenues were attributed to Laser Fare. While improved revenue is
anticipated by the Company, and expense containment measures continue to be
implemented, management is, nonetheless pursuing other strategies for raising
additional resources through debt and equity transactions.
The Board of Directors has given approval for management to vigorously
purse other alternate sources of funding including conventional bank financing,
private placement of debt and/or equity securities, and application for
available governmental funds in the form of interest subsidized financing. The
Company has been engaged in extensive discussions with banking institutions and
investment bankers in furtherance of its capital raising efforts. Management
estimates that a total of $4.0 million in funds would satisfy its cash
requirements for the next 18 months. Based upon management's current estimates,
these funds would be applied to fund continued ExpressTool start-up expense and
expansion (approximately $2.0 million), to upgrade Laser Fare's equipment to
support its growth ($750,000), additional capital for Spectra Science to further
its research and development program ($1.1 million), and for general working
capital purposes, including marketing efforts of the Company's technologies.
There is no assurance, however, that management will be successful in raising
all or part of this amount on satisfactory terms or that it will be sufficient
to fund operations and scheduled debt repayment.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996
Consolidated revenues for the three months ended June 30, 1997 were
$1,574,818 and consisted primarily of laser division sales. Cost of sales
totaled $836,361, and a gross profit of $738,457 was realized for the quarter.
Consolidated revenues for the three months ended June 30, 1996 were $1,291,757
consisting solely of laser division sales.
9
<PAGE>
Cost of sales totaled $837,578, and a gross profit of $454,179 was realized for
the three months ended June 30, 1996.
Operating expenses for the three months ended June 30, 1997 were $41,215
as compared to $21,779 for the second quarter of 1996. This increase was a
result of operating expense from Spectra Science and ExpressTool subsidiaries.
Research and Development expenses were $464,033 for the three months ended June
30, 1997, as compared to $0.00 in the second quarter on 1996. The increase in
the second quarter of 1997 is contributed to the research and development
efforts in the Company's new subsidiaries, Spectra Science in the amount of
$198,710 and ExpressTool in the amount of $265,323.
General and administrative expenses were $531,960 for the three months
ended June 30, 1997 as compared to $345,043 for the second quarter of 1996. The
increase of $186,917 or 54% was primarily due to the addition of the Spectra
Science subsidiary, contributing approximately $228,102 of the total for the six
months ended June 30, 1997. Selling expenses were $140,595 for the quarter ended
June 30, 1997, as compared to $132,310 for the second quarter of 1996. The
increase was primarily attributed to increased marketing activities of Laser
Fare.
Depreciation and amortization expenses totaled $253,706 for the second
quarter of 1997, as compared to $151,142 for the second quarter of 1996.
Increased depreciation and amortization expense of $102,564 or 68% from the
second quarter of 1996, resulted primarily from depreciation and amortization of
property and equipment and technology by Spectra Science.
Interest expense during the second quarter ended June 30, 1997 was
$517,930 as compared to $144,506 for the second quarter of 1996. The increase of
$373,424 was primarily due to the recognition of the discount attributable to
the beneficial conversion feature of convertible debentures in the amont of
$406,849 for the second quarter of 1997 as compared to $60,222 for the second
quarter of 1996. Interest and other income for the second quarter of 1997 was
$86,233 as compared to $53,769 for the second quarter of 1996. The increase of
$32,464 was primarily due to the minority interest in net loss of subsidiary in
the amount of $60,068 recognized in the second quarter of 1997.
The Company has a consolidated net loss of $1,124,749 for the three months
ended June 30, 1997, as compared to the net loss of $296,170 for the three
months ended June 30, 1996. The increase in net loss is primarily attributed to
interest expense attributable to the beneficial conversion feature of
convertible debentures in excess of amount recognized for the quarter ended June
30, 1996 in the amount of $346,627, research and development expenses of Spectra
Science in the amount of $198,710, and research and development and set-up
expenses associated with its ExpressTool subsidiary of $265,323, totaling
$810,660 or 98% of increase.
10
<PAGE>
Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996
Consolidated revenues for the six months ended June 30, 1997 were
$2,935,217 and consisted primarily of laser division sales. Cost of sales
totaled $1,668,913, and a gross profit of $1,266,304 was realized for the
period. For the six months ended June 30, 1996, sales totaled $2,594,592 and
consisted solely of laser division sales. Consolidated cost of sales were
$1,623,414 for the first six months of 1996 and the Company realized a gross
profit of $971,178 for that period.
Operating expenses increased from $55,217 during the first six months of
1996, to $59,923 for the first six months of 1997. Research and development
expenses were $976,273 during the first six months of 1997 as compared to $ 0.00
for the six months ended June 30, 1996. The increase was due to the increase in
research and development efforts in Spectra Science in the amount of $505,986
and ExpressTool in the amount of $470,287.
General and administration expenses increased to $1,128,966 for the six
months ended June 30, 1997 from $688,197 for the six months ended June 30, 1996.
The increase of $440,769 was primarily due to the addition of the Spectra
Science subsidiary contributing approximately $437,668 of the total for the six
months ended June 30, 1997. Selling expenses were $270,676 for the first six
months of 1997 as compared to $249,384 for the first six months of 1996. The
increase was a result of increased sales efforts at Laser Fare.
Depreciation and amortization expenses totaled $547,196 for the first six
months of 1997 compared to $305,260 for the first six months of 1996. Increased
depreciation and amortization expense of $241,936 or 79% from the first six
months of 1996 resulted primarily from depreciation and amortization of property
and equipment and technology by Spectra Science.
Interest expense was $605,786 and $233,538 during the six month periods
ended June 30, 1997 and 1996, respectively. The increase in interest expense of
$372,248 was due primarily to the recognition of discount attributable to the
beneficial conversion feature of the convertible debentures in the amount of
$406,849 for the six month period ended June 30, 1997 as compared to $60,222 for
the six month period ended June 30, 1996. Interest and other income for the
first six months of 1997 amounted to $336,293 compared to $57,940 for the first
six months ending June 30, 1996. The increase was primarily due to minority
interest in net loss of subsidiary in the amount of $262,183 and gain on sale of
assets of $38,064.
The Company had a consolidated net loss of $1,986,223 for the six months
ended June 30, 1997, as compared to a net loss of $523,478 during the six months
ended June 30, 1996.
Part II - Other Information
Not Applicable
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.
August 13, 1997 INFINITE MACHINES CORP.
By: /s/ Clifford G. Brockmyre
-----------------------------
Clifford G. Brockmyre, President
And Chief Operating Officer
By: /s/ Daniel T. Landi
-----------------------------
Daniel T. Landi
Chief Financial and Accounting
Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB,
6/30/97 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 453,460
<SECURITIES> 0
<RECEIVABLES> 908,873
<ALLOWANCES> 32,665
<INVENTORY> 163,193
<CURRENT-ASSETS> 1,643,796
<PP&E> 6,408,440
<DEPRECIATION> 1,459,645
<TOTAL-ASSETS> 8,535,519
<CURRENT-LIABILITIES> 2,246,492
<BONDS> 0
0
0
<COMMON> 9,239
<OTHER-SE> 1,106,718
<TOTAL-LIABILITY-AND-EQUITY> 8,535,519
<SALES> 2,935,217
<TOTAL-REVENUES> 2,935,217
<CGS> 1,668,913
<TOTAL-COSTS> 2,983,034
<OTHER-EXPENSES> 269,493
<LOSS-PROVISION> 14,898
<INTEREST-EXPENSE> 605,786
<INCOME-PRETAX> (1,986,223)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,986,223)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,986,223)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
