<PAGE> 1
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 June 30, 1996.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from _____________ to ________________ .
COMMISSION FILE NUMBER: 0-22294
MED/WASTE, INC.
-----------------------------------------------------------------------------
(Exact Name of Small Business Issuer as
Specified in its Charter)
Delaware 65-0297759
-----------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3890 N.W. 132nd Street, Suite K, Opa Locka, Florida 33054
-----------------------------------------------------------------------------
(Address of principal executive offices)
(305) 688 - 3931
-----------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
--- ---
The number of shares outstanding of the registrant's common stock $.001 par
value as of August 7, 1996 was 1,945,827.
<PAGE> 2
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 94,233 $ 120,917
Fixed income investments 511,833 750,238
Accounts receivable, net of allowances of $116,000
and $74,000 1,518,861 1,047,689
Current portion of notes receivable from franchisees 1,135,237 980,894
Inventories 227,053 192,595
Prepaid expenses 266,731 176,643
------------------------------
Total current assets 3,753,948 3,268,976
Notes receivable from franchisees, net of current
portion, less allowance of $40,000 and $51,000 in
1996 and 1995, respectively 827,828 792,697
Operating and office equipment, net 1,491,535 1,539,639
Intangible assets, net of accum. amortization 420,004 441,393
Other assets 161,486 133,818
------------------------------
Total assets $6,654,801 $6,176,523
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $1,366,899 $1,279,227
Current portion of capital lease obligations 162,754 144,390
Notes payable (note 3) 464,599 154,599
Deferred revenue on franchise sales 213,050 360,312
Customer deposits 37,501 33,267
------------------------------
Total current liabilities 2,244,803 1,971,795
------------------------------
Capital lease obligations, less current portion 441,892 435,702
------------------------------
Shareholders' equity:
Preferred stock, $.10 par value; 1,000,000 shares
authorized; none outstanding -- --
Common stock, $.001 par value; 10,000,000 shares
authorized; 1,909,838 in 1996 and 1,903,588
in 1995 shares issued and outstanding 1,910 1,904
Additional paid-in capital 5,897,531 5,882,837
Deficit (1,900,678) (2,085,058)
------------------------------
3,998,763 3,799,683
Less cost of treasury stock: 11,824 shares (30,657) (30,657)
------------------------------
Total shareholders' equity 3,968,106 3,769,026
------------------------------
Total liabilities and shareholders' equity $6,654,801 $6,176,523
==============================
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
2
<PAGE> 3
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
June 30, June 30,
--------------------------- -----------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $4,253,233 $3,421,679 $8,667,305 $6,587,126
Costs and expenses:
Operating costs 3,120,861 2,512,514 6,339,419 4,859,413
Administrative and selling
expenses 1,047,163 879,881 2,181,816 1,882,311
Amortization of intangibles 10,695 38,166 21,389 76,802
--------------------------- -----------------------------
Total 4,178,719 3,430,561 8,542,624 6,818,526
--------------------------- -----------------------------
Operating profit (loss) 74,514 (8,882) 124,681 (231,400)
Interest income, net 22,103 18,607 59,694 38,212
--------------------------- -----------------------------
Net income (loss) $ 96,617 $ 9,725 $ 184,375 $ (193,188)
=========================== =============================
Net income (loss) per share $ .05 $ .01 $ .10 $ (.10)
=========================== =============================
Weighted average shares
outstanding 1,898,014 1,885,178 1,895,420 1,876,845
=========================== =============================
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
3
<PAGE> 4
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months ended June 30,
------------------------
1996 1995
------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $184,375 $ (193,188)
Adjustments to reconcile net income (loss) to net cash used
in operating activities, net of effects of
acquisitions:
Depreciation and amortization 132,276 176,684
Provision for doubtful notes and accounts receivable 64,571 45,000
Changes in operating assets and liabilities:
Increase in accounts receivable (535,743) (108,846)
Increase in notes receivable from franchisees (189,474) (299,189)
Increase in inventories (34,458) (20,912)
Increase in prepaid expenses (90,088) (29,663)
Increase in other assets (27,668) (5,480)
Increase in accounts payable and
accrued liabilities 87,672 151,567
Decrease in deferred revenues on
franchise sales (147,262) (187,475)
Increase in customer deposits 4,234 3,613
------------------------
Net cash used in operating activities (551,565) (467,889)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of fixed income investments 238,405 397,062
Purchases of operating and office equipment (62,778) (229,116)
Cash payment to acquire Broward Floor -- (120,000)
------------------------
Net cash used in investing activities 175,627 47,946
</TABLE>
4
<PAGE> 5
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months ended June 30,
----------------------------
1996 1995
----------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit $310,000 --
Repayment of loan to director -- $250,000
Proceeds from equipment lease obligations 66,131 111,302
Issuance of common shares and warrants for cash 14,700 68,749
Purchase of treasury stock -- (30,657)
Payments on installment notes and capital lease obligations (41,577) (34,926)
----------------------------
Net cash provided by financing activities 349,254 364,468
----------------------------
Decrease in cash and cash equivalents (26,684) (55,475)
Cash and cash equivalents at beginning of year 120,917 145,023
----------------------------
Cash and cash equivalents at end of period $ 94,233 $ 89,548
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 38,036 $ 28,707
============================
Promissory notes issued for the acq. of Broward Floor -- $ 70,000
============================
Capital lease obligations incurred for trucks -- $196,150
============================
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements
5
<PAGE> 6
MED/WASTE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and 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 considered necessary for a fair presentation have been
included.
Med/Waste, Inc. (the "Company") provides medical waste management and
commercial cleaning services through its wholly owned subsidiaries, Safety
Disposal System, Inc. ("SDS") and The Kover Group, Inc. ("Kover").
Operating results for the three-month period ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 1996. The significant accounting principles are the same
as those used to prepare the annual audited financial statements. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1995.
2. ACCOUNTING POLICIES
Fixed Income Investments. All of the Company's fixed income investments are
debt securities available for sale. Investments in debt securities are stated
at cost, which approximates fair value.
Notes Receivable from Franchisees. The notes from Kover's franchisees bear
interest at 1% per month, generally from the time Kover provides the franchisee
with commercial cleaning accounts for servicing. Principal and interest
payments are generally deducted from the monthly amounts Kover owes the
franchisee for providing cleaning services. Each franchise agreement is
subject to termination for nonpayment of the franchise note. The notes are
personally guaranteed by the individuals who own the franchise and have terms
of two years or less.
Deferred Revenue on Franchise Sales. Revenues from commercial cleaning are
recognized as services are performed and supplies are provided. Revenues from
the sale of franchises are recognized after the Company has completed the
requirements of the agreement. The portion of the franchise sale fees related
to providing new commercial cleaning accounts to the franchisees is included in
the balance sheet as deferred revenue until the requirements of the agreement
have been fulfilled.
6
<PAGE> 7
The gross amounts billed by Kover for commercial cleaning services are included
in revenues and the gross amounts due franchisees for providing the cleaning
services (100% of such revenues less royalties and management fees of 10% to
15%) are included in operating costs.
Revenue from On-Site Equipment Sales. Revenues from sales of on-site autoclave
equipment to large quantity generators are recognized upon installation for
those sales that qualify as sales-type capital leases as defined by Statement
of Financial Standards No. 13 "Accounting for Leases". Revenues from operating
leases are recognized over their lease term.
3. NOTES PAYABLE
Notes payable consist of the following at June 30:
<TABLE>
<CAPTION>
1996
--------
<S> <C>
Line of credit $394,599
Notes payable - Broward Floor 70,000
--------
Total $464,599
========
</TABLE>
In September 1995, the Company entered into an agreement with a bank, whereby
the Company can borrow up to $400,000 under a revolving line of credit. In
July 1996, the Company's agreement with the bank was amended, increasing the
revolving line of credit limit from $400,000 to $1,000,000. Interest is payable
monthly with principal payable upon demand. The interest rate on the line of
credit is prime plus 1%. Substantially all of the Company's assets have been
collateralized for the loan.
The notes payable - Broward Floor consist of two unsecured notes of $35,000
each which bear interest at 11 percent per annum and mature on July 1, 1996
and January 1, 1997, respectively. The note due July 1, 1996 was subsequently
paid.
4. LEASES
In June 1996, the Company entered into an agreement with a leasing company,
whereby the Company can finance equipment under a sale/leaseback arrangement
for the purposes of financing its equipment. The terms of the agreement
provide for a 60 month lease term and an interest rate equal to market at the
time of financing. Through June 30, 1996, the Company has sold and leased-back
equipment aggregating $66,131 at an interest rate of 9.5%.
5. STOCK OPTIONS
In April 1996 the Company granted options to two of its employees under the
1996 Employee Stock Option Plan (the "1996 Plan") to purchase an aggregate of
200,000 shares of common stock. The exercise price of the options is at the
date of grant fair market value of the underlying common stock of $2.25. The
options vest a third at the end of six months and a third on each anniversary
date of the grants date thereafter. The 1996 Plan was approved by the
Company's shareholders at the Company's 1996 annual meeting.
7
<PAGE> 8
6. NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed based on the weighted average
number of common and dilutive common equivalent shares outstanding during the
periods presented. The effect of dilutive stock options and warrants (common
stock equivalents) has been included in the computation for the periods
presented.
7. SALE OF KOVER'S PITTSBURGH FRANCHISE
On April 1, 1996, the Company assigned Kover's Pittsburgh master franchise and
sold certain notes receivables from franchises, accounts receivable, inventory,
and operating and office equipment related to Kover's Pittsburgh franchise for
$270,000. The $270,000 sales price was paid $135,000 in cash at closing and
the issuance of a $135,000 promissory note from the purchaser. The note earns
interest at a rate of 7.415%.
8. SUBSEQUENT EVENT - REGISTRATION OF WARRANTS
On July 16, 1996, the Securities and Exchange Commission declared effective the
Company's registration statement covering 308,139 shares underlying the
Company's private placement warrants. Each private placement warrant is
exercisable into one share of the Company's common stock at $2.40. The
expiration date for the private placement warrants is August 31, 1996. The
registration statement also covers an additional 171,000 shares of common stock
underlying other options and warrants.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH JUNE 30, 1995
REVENUES. Revenues for the three months ended June 30, 1996 amounted to
$4,253,233 as compared to $3,421,679 for the comparable period in 1995.
Kover's revenues were $3,135,570 in 1996, as compared to only $2,745,370 in
1995, for a 14.2% increase. Kover's increase in revenues was due to higher
sales volume, notwithstanding the sale of Kover's Pittsburgh franchise.
Revenues for SDS totaled $1,117,663 in 1996, a 65.3% increase over 1995
revenues of $676,309. The higher SDS revenues are attributable to on-site
equipment sales.
OPERATING COSTS. Consolidated operating costs as a percent of revenue
decreased to 73.4% in the three months ended June 30, 1996 from 74.1% in 1995.
Operating costs for SDS decreased to 70.9% as a percent of revenue in 1996 from
74.5% in 1995 due to cost reductions taken in 1996. Kover operating costs
increased slightly to 74.2% in 1996 from 73.2% in 1995.
ADMINISTRATIVE AND SELLING EXPENSES. Administrative and selling expenses as a
percentage of revenue decreased to 24.6% in 1996 from 25.7% in 1995 as a result
of cost reduction efforts taken in 1996.
AMORTIZATION OF INTANGIBLES. Amortization of intangibles decreased $27,471 to
$10,695 in 1996 from $38,166 in 1995 primarily due to the impairment loss
recorded in the fourth quarter of 1995.
OPERATING PROFIT (LOSS). The Company recorded an operating profit of $74,514
in 1996 as compared to an operating loss of $(8,882) in 1995. The significant
improvement in operating earnings was primarily due to the on-site equipment
sales of SDS which have higher margins.
INTEREST INCOME, NET. Interest income, net of interest expense increased
$3,496 to $22,103 in 1996 from $18,607 in 1995. The increase was due to
interest earned on notes receivable related to the sale of Kover's Pittsburgh
franchise.
NET INCOME (LOSS). The Company had net income of $96,617 in 1996 as compared
to a net income of $9,725 in 1995. The significant improvement in net income
was primarily due to the on-site equipment sales of SDS which have higher
margins, increased sales volume of Kover and SDS' reduced administrative
expenses as a percentage of revenues. The 1996 net income was a 894%
improvement over 1995.
9
<PAGE> 10
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH JUNE 30, 1995
REVENUES. Revenues for the six months ended June 30, 1996 amounted to
$8,667,305 as compared to $6,587,126 for the comparable period in 1995.
Kover's revenues were $6,532,810 in 1996, as compared to only $5,239,380 in
1995, for a 24.7% increase. Kover's increase in revenues was due to higher
sales volume, notwithstanding the sale of Kover's Pittsburgh franchise.
Revenues for SDS totaled $2,134,495 in 1996, a 58.4% increase over 1995
revenues of $1,347,746. The higher SDS revenues are attributable to on-site
equipment sales.
OPERATING COSTS. Consolidated operating costs as a percent of revenue
decreased to 73.1% in the six months ended June 30, 1996 from 73.8% in 1995.
Operating costs for SDS decreased to 68.1% as a percent of revenue in 1996 from
72.4% in 1995 due to higher margins on on-site equipment sales and overall cost
reduction efforts taken by the Company during 1996. Kover operating costs
increased slightly to 74.8% in 1996 from 74.1% in 1995.
ADMINISTRATIVE AND SELLING EXPENSES. Administrative and selling expenses as a
percentage of revenue decreased to 25.2% in 1996 from 28.6% in 1995 as a result
of cost reduction efforts taken in 1996.
AMORTIZATION OF INTANGIBLES. Amortization of intangibles decreased $55,413 to
$21,389 in 1996 from $76,802 in 1995 primarily due to the impairment loss
recorded in the fourth quarter of 1995.
OPERATING PROFIT (LOSS). The Company recorded an operating profit of $124,681
in 1996 as compared to an operating loss of $(231,400) in 1995. The
significant improvement in operating earnings was primarily due to the on-site
equipment sales of SDS which have higher margins and the increased sales volume
of Kover.
INTEREST INCOME, NET. Interest income, net of interest expense increased
$21,482 to $59,694 in 1996 from $38,212 in 1995. The increase was due to
interest earned on notes receivable related to the sale of Kover's Pittsburgh
franchise.
NET INCOME (LOSS). The Company had net income of $184,375 in 1996 as compared
to a net (loss) of $(193,188) in 1995. The significant improvement in net
income was primarily due to the on-site equipment sales of SDS which have
higher margins, increased sales volume of Kover and SDS' reduced administrative
expenses as a percentage of revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1996 amounted to $1,509,145. The
Company's sources of cash during 1996 has been the assignment of equipment
leases and borrowings under the Company's line of credit. During the six
months ended June 30, 1996, cash decreased by $26,684 to $94,233. Operating
activities used $551,565 of cash, principally due to the increase in SDS'
accounts receivables related to on-site equipment sales, Kover's increased
notes receivables from franchisees and a decrease in Kover's deferred revenue
on franchise sales, offset partially by net income of $184,375, net of
depreciation and provision for doubtful accounts. The cash generated by net
income was primarily due to the sale by SDS of on-site equipment and related
assignment of notes to a leasing company. Financing activities provided
$349,254 of cash, principally due to borrowings under the line of credit.
In September 1995, the Company entered into an agreement with a bank, whereby
the Company can
10
<PAGE> 11
borrow up to $400,000 under a revolving line of credit. At June 30, 1996, the
Company had $394,599 in borrowings under the line. Substantially all of the
Company's assets have been collateralized by the loan. In July 1996, the
Company's line of credit with a bank was increased by $600,000 to $1,000,000.
Other terms and conditions of the loan remained unchanged.
During the first quarter of 1996, the Company entered into an agreement with a
leasing company, whereby the Company assigned with recourse two of the four
on-site equipment leases it obtained. The terms of the agreement call for a
rate of prime plus two percent and the collateralizing of certain on-site
equipment. The Company received $290,483, under this arrangement.
On April 1, 1996, the Company assigned Kover's Pittsburgh master franchise and
sold certain notes receivables from franchises, accounts receivable, inventory,
and operating and office equipment related to Kover's Pittsburgh franchise for
$270,000. The $270,000 sales price was paid $135,000 in cash at closing and
the issuance of a $135,000 promissory note from the purchaser. The note earns
interest at a rate of 7.415% per annum. Interest and principal payments of
$1,710 is payable monthly from May 1, 1997 to April 30, 2001, with a final
payment of $94,872 due on May 1, 2001. Interest in the amount of $4,050 was
prepaid at closing. The note is collateralized by the assets sold.
In June 1996, the Company entered into an agreement with a leasing company,
whereby the Company can finance equipment under a sale/leaseback arrangement
for the purposes of financing its equipment. The terms of the agreement
provide for a 60 month lease term and an interest rate equal to market at the
time of financing. Through June 30, 1996, the Company has sold and leased-back
equipment aggregating $66,131 at an interest rate of 9.5%.
On July 16, 1996 the Securities and Exchange Commission declared effective the
Company's registration statement covering 308,139 shares underlying the
Company's private placement warrants. Each private placement warrant is
exercisable into one share of the Company's common stock at $2.40. The
expiration date for the private placement warrants is August 31, 1996. The
registration statement also covers an additional 171,000 shares of common stock
underlying other options and warrants.
NEW FASB PRONOUNCEMENTS. The Company does not presently intend to adopt in
1996 the fair value based method as encouraged by Statement of Financial
Accounting Standards (FAS) No. 123, Accounting for Stock Based Compensation.
Accordingly, there will be no effect to the financial statements.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not involved in any litigation that would give rise to material
liability against the Company or its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
The Company held its 1996 annual meeting of shareholders on May 9, 1996 (the
"Annual Meeting"). At the Annual Meeting, the Company's shareholders voted on
the following two matters: (a) election of directors; and (b) adoption of a
1996 Employee Stock Option Plan (the "Employee Plan").
Seven (7) directors were elected at the Annual Meeting with the votes as
indicated below:
<TABLE>
<CAPTION>
BROKER
NON-
NAME IN FAVOR AGAINST WITHHELD VOTE
----- -------- ------- -------- ----
<S> <C> <C> <C> <C>
Milton J. Wallace 1,228,181 -- 22,450 -
Daniel A. Stauber 1,231,181 -- 19,450 -
Arthur G. Shapiro 1,228,181 -- 22,450 -
Richard Green 1,231,181 -- 19,450 -
Phillip W. Kubec 1,231,181 -- 19,450 -
William D. Dolan 1,231,181 -- 19,450 -
Charles Scurr 1,228,181 -- 22,450 -
</TABLE>
The Employee Plan was approved by shareholders at the Annual Meeting by the
following vote:
For 854,927
Against 30,175
Withheld 5,000
Broker Non-Vote 360,529
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 11 - Statement re: computation of earnings (loss) per share
Exhibit 27 - Financial Statement Schedule
(b) Reports on Form 8-K. None.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Med/Waste, Inc.
Date: August 10, 1996 /s/ Daniel A. Stauber
--------------- -------------------------------
Daniel A. Stauber, President
and Chief Executive Officer
Date: August 10, 1996 /s/ Michael D. Elkin
--------------- -------------------------------
Michael D. Elkin, Vice President
and Chief Financial Officer
14
<PAGE> 1
Med/Waste Inc. and Subsidiaries
Exhibit 11 - Computation of Earnings (Loss) Per Share
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1996
------------------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income $ 96,617 $ 9,725
========== ==========
Weighted average shares outstanding 1,898,014 1,895,420
========== ==========
Net earnings per share $ .05 $ .01
========== ==========
<CAPTION>
Six Months Ended June 30, 1996
-------------------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income (loss) $ 184,375 $ (193,188)
========== ==========
Weighted average shares outstanding 1,895,420 1,876,845
========== ==========
Net earnings (loss) per share $ .10 $ (.10)
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MED/WASTE INC. FOR THE SIX MONTHS ENDED JUNE 30, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 94,233
<SECURITIES> 511,833
<RECEIVABLES> 1,634,861
<ALLOWANCES> 116,000
<INVENTORY> 227,053
<CURRENT-ASSETS> 3,753,948
<PP&E> 1,491,535
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,654,801
<CURRENT-LIABILITIES> 2,244,803
<BONDS> 0
0
0
<COMMON> 1,910
<OTHER-SE> 3,966,196
<TOTAL-LIABILITY-AND-EQUITY> 6,654,801
<SALES> 8,667,305
<TOTAL-REVENUES> 8,667,305
<CGS> 6,339,419
<TOTAL-COSTS> 8,542,624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 184,375
<INCOME-TAX> 0
<INCOME-CONTINUING> 184,375
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 184,375
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
