Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] 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 0-20356
MEDICAL INDUSTRIES OF AMERICA, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0158479
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1903 S. CONGRESS AVENUE, SUITE 400, BOYNTON BEACH, FLORIDA 33426
(Address of principal executive offices)
(561)737-2227
(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 report(s), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 18,442,092 shares of common
stock, no par value, were outstanding as of June 30, 1998.
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
10-QSB - QUARTER ENDED JUNE 30, 1998
INDEX
FORM 10-QSB FORM 10-QSB FORM 10-QSB
PART NO. ITEM NO. DESCRIPTION PAGE NO.
I. FINANCIAL INFORMATION
1. Financial Statements
- Condensed Consolidated Balance
Sheet as of June 30, 1998 3
- Condensed Consolidated Statements of Operations
and Accumulated Deficit for the Three and Six
Months Ended June 30, 1998 and 1997 5
- Condensed Consolidated Statements of Cash
Flows for the Six Months Ended
June 30, 1998 and 1997 6
- Notes to Condensed Consolidated Financial
Statements 8
2. Management's Discussion and Analysis
or Plan of Operations 10
II. OTHER INFORMATION
1. Legal Proceedings 12
2. Changes in Securities and Use of Proceeds 12
3. Defaults Upon Senior Securities 12
4. Submission of Matters to a Vote Security
Holders 12
5. Other Information 13
6. Exhibits and Reports on Form 8-K 13
Signatures
2
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(Unaudited)
ASSETS
CURRENT ASSETS:
- ---------------
Cash and cash equivalents ................................ $ 879,432
Trade accounts receivable, net ........................... 5,187,990
Current portion of notes and mortgage receivables ....... 257,726
Inventory of medical supplies ............................ 146,660
Prepaid expenses and other current assets ................ 756,766
------------
Total current assets ................................... 7,228,574
============
PROPERTY AND EQUIPMENT:
- -----------------------
Mobile cardiac catheterization laboratory
and medical equipment ................................... 2,042,673
Furniture and office equipment ........................... 1,135,170
Aircraft and related equipment ........................... 8,918,259
Building and building improvements ....................... 467,134
------------
12,563,236
Less: accumulated depreciation and amortization .......... (1,376,747)
------------
Property and equipment-Net ............................. 11,186,489
------------
OTHER ASSETS:
- -------------
Notes and mortgage receivables, less current maturities .. 1,836,074
Goodwill ................................................. 5,563,899
Investment in equity securities .......................... 2,483,126
Licenses ................................................. 970,588
Other assets ............................................. 1,187,428
------------
Total other assets ..................................... 12,041,115
------------
TOTAL ASSETS ........................................... 30,456,178
============
See Notes to Consolidated Financial Statements
3
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
- --------------------
Accounts payable ......................................... $ 2,034,808
Accrued liabilities ...................................... 777,716
Current portion of long-term debt and notes payable ...... 1,993,869
Current portion of capital lease obligations ............. 145,764
Convertible subordinated debentures ...................... 400,000
Due to related party ..................................... 1,101,893
------------
Total current liabilities .............................. 6,454,050
------------
LONG TERM LIABILITIES:
- ----------------------
Long-term debt and notes payable - net of current
portion ................................................ 6,840,691
Convertible subordinated debentures ...................... 367,500
Due to related parties ................................... 305,790
Capital lease obligations, net of current portion ........ 740,908
------------
Total long term liabilities ......................... 8,254,889
------------
Total Liabilities ..................................... 14,708,939
------------
SHAREHOLDERS' EQUITY:
- ---------------------
Preferred shares, authorized 10,000,000 shares:
issued and outstanding:
Series B convertible shares, 10,000 issued,
$200 stated value ..................................... 1,740,000
Common shares, no par value, authorized
50,000,000 issued and outstanding 18,442,092 ............. 34,214,220
Preferred shares to be issued ............................ 832,000
Accumulated deficit ...................................... (19,393,907)
Unrealized loss on equity securities ..................... (470,074)
Stock subscription receivable ............................ (1,175,000)
------------
Total shareholders' equity ......................... 15,747,239
------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............ 30,456,178
============
See Notes to Consolidated Financial Statements
4
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue ..................... $ 5,764,125 $ 1,267,375 $ 8,985,143 $ 3,187,301
------------ ------------ ------------ ------------
Expenses:
Cost of revenues ......... 2,967,423 813,945 4,580,429 1,720,995
General and administrative
expenses ................ 1,825,542 513,097 3,035,040 1,023,774
Other .................... -- 4,911 -- 4,911
------------ ------------ ------------ ------------
Total expenses ..... 4,792,865 1,331,953 7,615,469 2,749,680
------------ ------------ ------------ ------------
Earnings before interest,
taxes, depreciation and
amortization ............... 971,160 (64,578) 1,369,674 437,621
Depreciation and amortization 338,516 104,690 486,309 187,030
Interest expense, net ....... 251,397 50,129 388,339 58,489
------------ ------------ ------------ ------------
Net income (loss) ........... 381,247 (219,397) 495,026 192,102
Accumulated deficit-beginning
of year ................... (19,775,154) (19,999,790) (19,888,933) (20,411,289)
Accumulated deficit-end of
periods ................... $(19,393,907) $(20,219,187) $(19,393,907) $(20,219,187)
Earnings (loss) per share of
common stock:
Basic earnings (loss) per
share ................. $ .02 $ (.05) $ .03 $ .06
============ ============ ============ ============
Diluted earnings per
share ............. $ .02 $ -- $ .03 $ .04
============ ============ ============ ============
Weighted average shares
outstanding:
Primary .............. 18,441,592 4,375,857 17,272,812 2,986,489
============ ============ ============ ============
Diluted .............. 19,994,311 -- 18,785,690 4,383,106
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
1998 1997
----------- ---------
Operating activities:
Net income ......................................... $ 495,026 $ 192,102
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Depreciation and amortization ................. 486,309 187,030
Minority Interest ............................. -- (3,129)
Loss on disposition of property and
equipment ................................... -- 2,544
Common stock issued for services
rendered .................................... -- 822,502
Net proceeds from litigation settlement ....... -- 635,103
Changes in assets and liabilities:
(Increase) decrease in:
Trade accounts receivable .................. (3,193,786) (484,635)
Inventories of medical supplies ............ (11,130) (13,126)
Asset held for sale ........................ -- (100,000)
Prepaid expenses and other current
assets ..................................... (303,476) (220,744)
Other assets ............................... (382,292) (1,897)
Accounts payable ........................... 902,971 60,411
Accrued liabilities ........................ 27,674 (123,032)
Due to related parties ..................... (426) --
----------- ---------
Net cash (used in) provided by
operating activities .......................... (1,979,130) 953,129
----------- ---------
Investing activities:
Issuance of notes receivable ....................... (410,000) (697,822)
Payment of notes receivable ........................ 498,254 117,002
Purchase of property and equipment ................. (204,915) (233,179)
----------- ---------
Net cash (used in) investing activities ......... (116,661) (813,999)
----------- ---------
Financing activities:
Proceeds from long term debt ....................... 2,050,107 34,000
Proceeds from convertible subordinated
debentures ......................................... 367,500 216,576
Payments of capital lease obligations .............. (88,753) (60,436)
Payments of long term debt ......................... (349,881) (154,052)
----------- ---------
Net cash provided by financing activities ....... 1,978,973 36,088
----------- ---------
Net (decrease) increase in cash .................... (116,818) 175,218
Cash at the beginning of period .................... 996,250 241,461
----------- ---------
Cash at the end of period .......................... $ 879,432 $ 416,679
=========== =========
6
<PAGE>
Supplemental disclosure of cash flow information:
Interest paid ..................................... $ 356,339 $ 11,708
=========== =========
Supplemental disclosure of non-cash investing and financing activities:
Non-cash aspects of the acquisition of Florida Physicians Internet, Inc.:
Fair value of assets acquired ................ 653,048
Accrued payment for acquisition............... 1,415,000
Preferred shares to be issued in
connection with acquisition .................... 832,000
On April 1, 1998, the Company exchanged 680,000 common shares of the
Company and a note payable in the amount of $90,000 to acquire 100% of the
outstanding common stock of PCS.
On April 1, 1998, the Company exchanged 607,500 common shares of the
Company valued for an 81% interest in Ivanhoe.
7
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
(UNAUDITED)
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Medical Industries of America, Inc. was incorporated in September 1989,
in the State of Florida and has its principal executive offices at 1903 S.
Congress Ave., Suite 400, Boynton Beach, Florida 33426, telephone number
(561) 737-2227. Unless the context otherwise requires, all references to the
"Company" include Medical Industries of America, Inc. and its wholly-owned
subsidiaries.
The Company's Consolidated Financial Statements include the Company's
wholly-owned subsidiaries: Heart Labs of America, Inc. ("HLOA"), Florida
Physicians Internet, Inc. ("FPII"), PRN of North Carolina, Inc. ("PRN"), Care
America Integrated Health Services, Inc.("Care America"), Global Air Rescue,
Inc., Global Air Charter, Inc. ("Global"), Medical Billing of America, Inc.
("MBOA"), Pharmacy Care Specialists, Inc. ("PCS") and its 81% owned subsidiary
Ivanhoe Medical Systems, Inc. ("Ivanhoe") and a 51% owned subsidiary
Clearwater Jet Center, Inc. ("Clearwater").
Basis of Presentation and Consolidation
The accompanying consolidated financial statements are unaudited. These
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Certain information and
footnote disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the consolidated financial statements reflect all adjustments (which
include only normal recurring adjustments) necessary to state fairly the
consolidated financial position and consolidated results of operations as of and
for the periods indicated. These consolidated financial statements should be
read in conjunction with the Company's consolidated financial statements and
notes thereto for year ended December 31, 1997, included in the Company's Form
10-KSB as filed with the Securities and Exchange Commission.
Earnings (Loss) Per Common Share
Basic earnings (loss) per common share is calculated by dividing earnings
by the weighted average common shares outstanding. Diluted earnings per share
have been computed based on the assumption that all of the convertible preferred
stock is converted into common shares, and that all stock options and warrants
where the exercise price is less than the market value have been considered
exercised under the treasury stock method. Under this assumption, the weighted
average number of common shares outstanding has been increased accordingly.
8
<PAGE>
Estimates
The preparation of financial statements in conformity with general
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Note 2 - Merger Agreement
Medical Industries of America, Inc. ("MIOA") executed a definitive
agreement with privately held Physician Health Corporation ("PHC") on August 3,
1998. Pursuant to the MIOA Agreement, PHC common shareholders will receive 1.91
common shares of MedSurg for each common share of PHC. All of PHC's convertible
preferred stock will be exchanged into preferred stock of MIOA, and the
conversion ratio of the preferred stock will be adjusted to reflect the 1.91
exchange ratio. PHC shareholders, on a fully diluted basis, are expected to hold
approximately 74 percent of the combined company. The proposed combination,
which will be accounted for as a purchase, is expected to be tax free for PHC
shareholders.
The respective Board of Directors for MIOA and PHC have both approved the
merger. The Annual Shareholders Meeting for MIOA is anticipated to be scheduled
early in the fourth quarter of 1998. MIOA common stock currently trades on the
Nasdaq SmallCap Market. Effective with the merger, the combined Company's name
will be changed to MedSurg Ancillaries, Inc. ("MedSurg"). The Merger Agreement
provides for: the approval of the National Association of Security Dealers
(NASD) for continued listing of the combined company by the Nasdaq SmallCap
Market; approval from the shareholders of both companies; MIOA obtaining a $3.0
million loan from PHC on or before August 14, 1998 for acquisitions and
expansion purposes; the ability to terminate by either MIOA or PHC if the
average MIOA stock price under certain conditions is less than $1.50, subject to
certain upward adjustments, or greater than $4.00 per share; and other customary
conditions.
Note 3 - Business Acquired
Effective April 1, 1998, the Company acquired 81% of the outstanding stock
of Ivanhoe Medical Systems ("Ivanhoe") in exchange for 607,500 shares of the
Company's common stock and a predetermined number of shares to be issued under
an "earn-out" financing arrangement whereby shares will be issued upon Ivanhoe
achieving pre-set earnings benchmarks. The acquisition has been accounted for
using the purchase method of accounting and the net assets and revenue and
expenses of Ivanhoe will be included in the Company's consolidated financial
statements from the date of acquisition.
Effective April 1, 1998, the Company acquired 100% of the outstanding
stock of PCS in exchange for 680,000 shares of the Company's common stock,
$90,000 in cash and a predetermined number of shares issued under an "earn-out"
financing arrangement whereby shares to be issued upon PCS achieving pre-set
earnings benchmarks. The acquisition has been accounted for using the purchase
method of accounting and the net assets and revenue and expenses of PCS will be
included in the Company's consolidated financial statements from the date of
acquisition.
9
<PAGE>
On August 6, 1998, the Company acquired 100% of the outstanding stock of
David S. Klein, M.D.,P.C. in exchange for $3,300,000 in common stock of the
Company of which $1,320,000 is paid at closing and the balance to be based on an
earn-out.
Note 4 - Financing Activity
On April 27, 1998, the Company executed a promissory note from a bank in
the amount of $600,000, which is due on demand and calls for monthly interest at
prime plus 1 1/2%.
On June 10, 1998, the Company issued $360,000 of subordinated debentures
which calls for semi-annual interest payments at 10%, with the principal and
unpaid accrued interest due December 10, 2000. The holders of the subordinated
debentures received options to purchase 121,750 shares of the Company's common
stock at an exercise price of $1.50.
Effective July 21, 1998, the Company executed a two year line of credit to
borrow up to $1,500,000. The line is collateralized by accounts receivable from
four subsidiaries and calls for monthly interest at prime plus 2.65% plus
monthly fees.
On July 31, 1998, the Company issued $3,000,000 of 6% convertible A
debentures, calling for semi-annual interest with a maturity date of July 29,
2001. The holders of the 6% convertible A debentures received options to
purchase 300,000 shares of the Company's common stock at an exercise price of
$2.50.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
COMPARISON OF THE RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1998 AND
JUNE 30, 1997
Total revenues from operations increased to $8,985,143 for the six months
ended June 30, 1998 as compared to $3,187,301 for the six months ended June 30,
1997, principally as a result of the acquisitions of PRN, Care America, Global,
Ivanhoe, PCS and sales at HLOA.
Cost of revenues, which included medical supplies, technical salaries and
benefits and other expenses directly associated with the Company's revenues
increased to $4,580,429 from $1,720,995 for the six months ended June 30, 1998
and 1997, respectively. This increase is primarily due to the acquisitions of
PRN, Care America, Global, Ivanhoe, PCS and the cost of sales at HLOA.
General and Administrative expenses increased to $3,035,040 for the six
months ended June 30, 1998 compared to $1,023,774 for the six months ended June
30, 1997. This increase is primarily due to the acquisitions.
Interest expense increased to $388,339 for the six months ended June 30,
1998 as compared to $58,489 for the six months ended June 30, 1997. This
increase is primarily attributable to interest on the airplane loans acquired as
part of the acquisition of Global Air Rescue, Inc.
10
<PAGE>
Net income increased to $495,026 for the six months ended June 30, 1998 as
compared to a net income of $192,102 for the six months ended June 30, 1997
resulted from increases in income from sales at HLOA and acquisitions.
In April 1998, the Company refinanced certain debt on the aircrafts
calling for interest at 9.75% payable over a seven year period with a ten year
amortization.
The Company had working capital of $793,365 at June 30, 1998 compared to
working capital deficiency of $403,353 at June 30, 1997.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 1998 AND
JUNE 30, 1997
Revenues increased to $5,764,125 for the three months ended June 30, 1998
from $1,267,375 for the three months ended June 30, 1997, principally as a
result of acquisitions and sales at HLOA.
Cost of revenues, which included medical supplies, technical salaries and
benefits and other expenses directly associated with the Company's services
increased to $2,967,423 from $813,945 for the three months ended June 30, 1998
and 1997, respectively. This increase is a result of acquisitions and the costs
associated with sales at HLOA.
General and Administrative expenses increased to $1,825,542 for the three
months ended June 30, 1998 compared to $513,097 for the three months ended June
30, 1997. This increase is a result of acquisitions.
Interest expense increased to $251,397 for the three months ended June 30,
1998 as compared to $50,129 for the three months ended June 30, 1997. The
increase is due to the financing of the aircrafts of the Global companies.
Net income for the three months ended June 30, 1998 was $381,247 compared
to a net loss of $219,397 for the three months ended June 30, 1997. This
increase is due to net income generated from the acquisitions and from sales at
HLOA.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in a complaint for declaratory action filed by
Westmark Group Holdings, Inc. ("Westmark") on June 23, 1998 in the Circuit Court
of the 15th Judicial Circuit in and for Palm Beach County, Florida, Case # 98
005545 AG. The plaintiff, Westmark, requests the Court to find that the Company
is not entitled to receive any additional shares of its stock based upon a 1997
settlement agreement between the parties. The Company believes that the
anti-dilution provisions of the settlement agreements were not abrogated by
certain unperformed conditions on the part of Westmark and that the Company is
entitled to have registered in its name 49% of the outstanding shares of
Westmark. Alternatively, if the conditions of the settlement agreements were
satisfied, the Company is of the opinion that Westmark is in breach of its
obligation to pay, in accordance with the agreed upon terms, its debt to the
Company in the original principal amount of $1,953,000. Failing the amicable
resolution of this matter pursuant to settlement negotiations which the parties
are presently engaged, the Company will file counterclaims to plaintiff's
complaint seeking appropriate redress. The resolution of this matter, either as
a result of settlement negotiations or court order, will not, in the opinion of
management, have any material adverse affect on the Company's financial
position.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the second quarter of 1998, the Company issued 1,417,875 shares of
unregistered common stock as part of the acquisitions of Ivanhoe, PCS and Care
America.
In April 1998, the Company issued 6,504 shares of unregistered common
stock for settlement of litigation.
On June 10, 1998, the Company issued $360,000 of subordinated debentures
which calls for semi-annual interest payments at 10%, with the principal and
unpaid accrued interest due December 10, 2000. The holders of the subordinated
debentures received options to purchase 121,750 shares of the Company's common
stock at an exercise price of $1.50.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS
None
12
<PAGE>
ITEM 5. OTHER INFORMATION
Medical Industries of America, Inc. ("MIOA") executed a definitive
agreement with privately held Physician Health Corporation ("PHC") on August 3,
1998. Pursuant to the MIOA Agreement, PHC common shareholders will receive 1.91
common shares of MedSurg for each common share of PHC. All of PHC's convertible
preferred stock will be exchanged into preferred stock of MIOA, and the
conversion ratio of the preferred stock will be adjusted to reflect the 1.91
exchange ratio. PHC shareholders, on a fully diluted basis, are expected to hold
approximately 74 percent of the combined company. The proposed combination,
which will be accounted for as a purchase, is expected to be tax free for PHC
shareholders.
The respective Board of Directors for MIOA and PHC have both approved the
merger. The Annual Shareholders Meeting for MIOA is anticipated to be scheduled
early in the fourth quarter of 1998. MIOA common stock currently trades on the
Nasdaq SmallCap Market. Effective with the merger, the combined Company's name
will be changed to MedSurg Ancillaries, Inc. ("MedSurg"). The Merger Agreement
provides for: the approval of the National Association of Security Dealers
(NASD) for continued listing of the combined company by the Nasdaq SmallCap
Market; approval from the shareholders of both companies; MIOA obtaining a $3.0
million loan from PHC on or before August 14, 1998 for acquisitions and
expansion purposes; the ability to terminate by either MIOA or PHC if the
average MIOA stock price under certain conditions is less than $1.50, subject to
certain upward adjustments, or greater than $4.00 per share; and other customary
conditions.
As further discussed in Part I, Item 2, the Company closed a $1,500,000
line of credit.
As further discussed in Part I, Item 2, the Company issued $3,000,000 of
6% convertible A debentures.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Reports on Form 8K
8-K filed on April 28, 1998 describing the proposed merger with Physician
Health Corporation ("PHC") with and into the Registrant that if consummated
would result in a change of control of the Registrant.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MEDICAL INDUSTRIES OF AMERICA, INC.
(Registrant)
AUGUST 12, 1998 By: /s/ MICHAEL F. MORRELL
(Date) Michael F. Morrell, Chairman of the Board & Chief
Executive Officer
AUGUST 12, 1998 By: /s/ PAUL C. PERSHES
(Date) Paul C. Pershes, President & Chief Financial Officer
AUGUST 12, 1998 By: /s/ LINDA MOORE
(Date) Linda Moore, Senior Vice President
AUGUST 12, 1998 By: /s/ ARTHUR KOBRIN
(Date) Arthur P. Kobrin, Senior Vice President of Financial
Operations
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 879,432
<SECURITIES> 0
<RECEIVABLES> 5,187,990
<ALLOWANCES> 373,612
<INVENTORY> 146,660
<CURRENT-ASSETS> 7,228,574
<PP&E> 12,563,236
<DEPRECIATION> 1,376,747
<TOTAL-ASSETS> 30,456,178
<CURRENT-LIABILITIES> 6,454,050
<BONDS> 0
0
2,572,000
<COMMON> 34,214,220
<OTHER-SE> (21,038,981)
<TOTAL-LIABILITY-AND-EQUITY> 30,456,178
<SALES> 8,985,143
<TOTAL-REVENUES> 8,985,143
<CGS> 4,580,429
<TOTAL-COSTS> 8,101,778
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 388,339
<INCOME-PRETAX> 495,026
<INCOME-TAX> 0
<INCOME-CONTINUING> 495,026
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 495,026
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
