SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1998 Commission File
number 1-11700
HEMAGEN DIAGNOSTICS, INC.
---------------------------------------
(Exact name of Small Business Issuer as
Specified in its Charter)
Delaware 04-2869857
----------------------- ----------------
(State of Organization) (I.R.S. Employer
Identification Number)
34-40 Bear Hill Road, Waltham, Massachusetts 02451
---------------------------------------------------
(Address of principal executive offices, Zip Code)
(781) 890-3766
--------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities and 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 [ ]
----- -----
As of December 31, 1998, the issuer had 7,851,890 shares of Common
Stock, $.01 par value per share outstanding.
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
-----------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets; 2
December 31, 1998 and
September 30, 1998
Consolidated Statements 4
of Operations; three months ended
December 31, 1998 and 1997
Consolidated Statements 5
of Cash Flows; three months
ended December 31, 1998 and 1997
Notes to Consolidated 6
Financial Statements
Item 2. Management's Discussion and 9
Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information. 16
Item 6. Exhibits and Reports on Form 8-K. 16
</TABLE>
PART I - Financial Information
Item 1. Financial Statements
--------------------
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
------
December 31, September 30,
1998 1998
------------ -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 168,654 $ 412,193
Accounts receivables, less allowance
for doubtful accounts of $477,000
at both December and September 2,910,611 3,294,598
Inventories 6,334,110 6,212,254
Prepaid expenses and other current assets 422,411 273,909
----------------------------
Total current assets 9,835,786 10,192,954
Property and Equipment:
Fixed assets 7,447,463 7,293,427
Less accumulated depreciation 3,203,523 2,926,231
----------------------------
4,243,940 4,367,196
Other assets 1,392,739 1,403,486
----------------------------
$15,472,465 $15,963,636
============================
</TABLE>
See Notes to Consolidated Financial Statements.
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31, September 30,
1998 1998
------------ -------------
<S> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses $ 1,485,968 $ 1,093,532
Deferred revenue 134,633 152,929
Note payable 2,251,926 3,500,000
----------------------------
Total current liabilities 3,872,527 4,746,461
----------------------------
Subordinated note payable, net of
unamortized discount of $160,085 and
$181,637 at December and September
respectively 1,089,915 1,068,363
----------------------------
Stockholders' Equity:
Preferred stock, no par value - 1,000,000
shares authorized; none issued -- --
Common stock, $.01 par value - 30,000,000
shares authorized; issued and
outstanding: 7,851,890 at both
December and September 78,519 78,519
Additional paid-in capital 13,440,947 13,440,947
Accumulated deficit (3,003,443) (3,364,654)
----------------------------
10,516,023 10,154,812
Receivable from stockholder (6,000) (6,000)
----------------------------
10,510,023 10,148,812
----------------------------
$15,472,465 $15,963,636
============================
</TABLE>
See Notes to Consolidated Financial Statements.
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------------
1998 1997
---- ----
<S> <C> <C>
Revenues:
Product sales $4,679,101 $2,843,767
Costs and expenses:
Cost of product sales 2,773,640 1,577,651
Research and development 267,547 279,290
Selling, general and administrative 1,177,012 883,499
--------------------------
4,218,199 2,740,440
--------------------------
Operating Income 460,902 103,327
Other income (expenses), net (99,691) (34,294)
--------------------------
Income before income taxes 361,211 69,033
Provision for income taxes (Note C) -- --
--------------------------
Net income $ 361,211 $ 69,033
==========================
Net income per share - basic (Note B) $ 0.05 $ 0.01
==========================
Net income per share - assuming
dilution (Note B) $ 0.05 $ 0.01
==========================
</TABLE>
See Notes to Consolidated Financial Statements.
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
----------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 361,211 $ 69,033
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 304,549 214,195
Amortization of debt discount 21,552 --
Changes in operating assets and liabilities:
Accounts and other receivables 383,987 176,331
Prepaid expenses and other current assets (148,502) 10,027
Inventories (121,856) (242,467)
Accounts payable and accrued expenses 392,436 (143,160)
Deferred revenue (18,296) --
----------------------------
Net cash provided by operating activities 1,175,081 83,959
----------------------------
Cash flows from investing activities:
Purchase of property and equipment (154,036) (29,939)
Other assets (16,510) 5,345
Proceeds from short-term investments, net -- (10,401)
----------------------------
Net cash used by investing activities (170,546) (34,995)
----------------------------
Cash flows from financing activities:
Payments of long-term debt, net -- (71,702)
Repayment of note payable (1,248,074) (198,983)
Proceeds from issuances of common stock -- 112,500
----------------------------
Net cash used by financing activities (1,248,074) (158,185)
----------------------------
Net decrease in cash and cash equivalents (243,539) (109,221)
Cash and cash equivalents at beginning of period 412,193 294,086
----------------------------
Cash and cash equivalents at end of period $ 168,654 $ 184,865
============================
</TABLE>
See Notes to Consolidated Financial Statements.
HEMAGEN DIAGNOSTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. Reference should be made to
the financial statements and related notes included in the Company's Form
10-KSB which was filed with the Securities and Exchange Commission on or
about December 18, 1998.
In the opinion of the management of the Company, the accompanying
financial statements reflect all adjustments which were of a normal
recurring nature necessary for a fair presentation of the Company's results
of operations and changes in financial position for the three month period
ended December 31, 1998. Operating results for these periods are not
necessarily indicative of the results that may be expected for the year
ending September 30, 1999.
NOTE B - NET INCOME PER SHARE
Earnings per share information is presented in accordance with the
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
per Share".
The following is a reconciliation of the denominator (number of
shares) used in the computation of earnings per share. The numerator (net
income) is the same for basic and diluted computations.
<TABLE>
<CAPTION>
Three months ended
December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Basic shares 7,851,890 7,791,066
Effect of dilutive securities
- options and warrants - 41,477
Dilutive shares 7,851,890 7,832,543
</TABLE>
Options and warrants to purchase 3,903,123 and 3,844,107 shares of
common stock at prices ranging from $1.20 through $3.25 and $2.19 through
$8.00 were outstanding during the three month period ended December 31, 1998
and December 31, 1997, respectively. These shares were not included in the
computation of diluted EPS because the options' exercise price was greater
than the average market price of the common shares. These options and
warrants expire at various dates through 2003.
NOTE C - INCOME TAXES
No provision for income taxes has been accrued during fiscal 1998 or
fiscal 1999 due to the availability of net operating loss carryforwards.
NOTE D - NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards.
Statement of Financial Accounting Standards Board No. 130, "Reporting
Comprehensive Income",("SFAS No. 130") establishes standards for reporting
and display of comprehensive income, its components, and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires that all items that
are required to be recognized under current accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information", which supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise," establishes standards for the way that
public enterprises report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It
also establishes standards for disclosures regarding products and services,
geographic areas, and major customers. SFAS No. 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated by the chief operating decision
make in deciding how to allocate resources and assessing performance.
Both of these new standards are effective for financial statements for
the periods beginning after December 15, 1997 and require comparative
information for earlier years to be restated. Management does not expect
implementation of these standards to materially affect future financial
statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires companies to recognize all derivatives contracts as either assets
or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss
recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are
attributed to the hedged risk or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of
change. SFAS 133 is effective for all fiscal years beginning after June 15,
1999.
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes. Accordingly,
the Company does not expect adoption of the new standard on October 1, 1999
to affect financial statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains certain forward-looking statements that are
subject to risks and uncertainties including, but not limited to those risks
set forth in the section entitled "Risk Factors" in the Prospectuses
contained in the Company's Registration Statements on Form S-3, Commission
File Nos. 33-80009 and 333-6147 (which sections are hereby incorporated by
reference herein). These risks and uncertainties could cause the
registrant's actual results in future periods to differ materially from its
historical results and from any opinions or statements expressed in such
forward-looking statements. Forward-looking statements speak only as of the
date of this report, and the Company cautions readers not to place undue
reliance on these statements.
Overview
The Company has historically concentrated its efforts on developing,
manufacturing and marketing medical diagnostic test kits used to aid in the
diagnosis of certain diseases. During the past several years the Company
has focused its expansion efforts on synergistic acquisitions of companies,
product lines and assets. The Company and its subsidiaries offer
approximately 135 different test kits that have been cleared by the United
States Food and Drug Administration ("FDA"). Several additional test kits
and components are sold in foreign markets.
On September 1, 1998, Hemagen completed the acquisition of the Analyst
automated system from Dade Behring, Inc. ("Dade"). The Analyst is a patent-
protected, low cost, bench top clinical chemistry and reagent system.
RAICHEM, Hemagen's clinical chemistry division will produce most of the
reagents for the Analyst, while Hemagen's facility in Maryland will assemble
the unit's rotors and ship completed products. This acquisition positions
the Company for growth in the multi-billion dollar point-of-care market as
well as the physician office laboratory and veterinary diagnostic markets.
Results of Operations
The Three Month Period Ended December 31, 1998 Compared to the
Three Month Period Ended December 31, 1997
Revenues for the three month period ending December 31, 1998 increased
to approximately $4,679,000 from approximately $2,844,000 (65%) for the same
period ending December 31,1997. This increase was primarily due to the
addition of sales from the Analyst(R) Acquisition (See "Liquidity and Capital
Resources") and an increase in sales of blood banking products.
Cost of product sales increased to approximately $2,774,000 from
approximately $1,578,000 (76%), due to the increase in sales and overhead
costs associated with production of Analyst(R) products. Cost of products
sales as a percentage of sales increased to 59% from 55% during the period.
The Company believes the costs of the Analyst products will decrease as a
percentage of sales as the Company: (a) reaches full production for the
Analyst business, and (b) more of the Analyst business production is shifted
to the Company's own facilities later this fiscal year.
Research and development expenses decreased to approximately $268,000
from approximately $279,000 (4%), primarily due to slightly less personnel
costs allocated to research and development. During the period the Company
received clearance from the United States Food and Drug Administration
("FDA") to market an automated test for HDL-Cholesterol through it's RAICHEM
subsidiary.
The Company is currently working to complete several research and
development programs including:
Autoimmune Diseases
The Company is continuing its development of products to aid in the
diagnosis of autoimmune diseases. ELISA kits for the detection of
antibodies associated with Beta 2 glycoprotein are currently under
development. These will be marketed with our recently approved anti-
cardiolipin kits. In addition, an ELISA Screen assay to detect total
antinuclear antibodies (ANA) is being developed. The Company believes that,
barring any unforeseen regulatory hurdles, these assays will become
commercially available during fiscal 1999.
Infectious Diseases
The Company has recently completed the development of products known
as a "ToRCH panel" which include assays for toxoplasmosis, rubella, CMV, and
herpes. Several of these products are being evaluated for submission to the
FDA for clearance.
The Company through it's Cellular Products, Inc. ("CPI") subsidiary
has begun production of the viral lysates used in the Company's infectious
disease products, including HIV, herpes and CMV. It is expected more of
these lysates will be developed during the current year.
Clinical Chemistry Reagents
The Company continues to develop additional assays and reagents to
fill in its clinical chemistry reagent product line sold under the RAICHEM
label. Almost all of the powdered clinical chemistry assays are now
available in liquid format, making RAICHEM one of the most complete clinical
chemistry lines offered worldwide. Continuing efforts are directed at
increasing the line of Serum Protein immunoassays ("SPIAs"), and the Company
is attempting to modify them for use in the Analyst system (see below).
Development of a kit to measure blood levels of ferritin is almost complete
and plans to produce several other assays are in place.
Analyst Instrument System
Studies have begun to modify the contents (test panel) of the human
Chem 14 rotor to ease reimbursement procedures and to make the product more
informative for the doctor and the patient. These modifications should be
completed during the current calendar year. As mentioned above, we are
exploring the possibility of expanding the rotor technology to immunoassays
of serum protein, therapeutic drug monitoring and a thyroid panel.
New Analyst Instrument
The Analyst instrument will be updated to include increased memory
capacity, user friendly calibration technology and a smaller instrument
footprint. The Company has entered into serious discussion with instrument
manufacturers and it believes that a new Analyst will be available in Fiscal
Year 2000.
Vet Rotor
The Company with personnel at Dade have developed a prototype rotor
for the veterinary market. It is denoted as the Vet 16 Rotor and it is
expected to be introduced to the market by April, 1999. At present, it is
being tested in the field at several sites.
Selling, general and administrative ("SG&A") expenses increased to
approximately $1,177,000 from approximately $883,000 (33%), due to an
increase in payroll, personnel and travel costs associated with the Company
hiring a sales force and due to an increase in royalties expense associated
with the purchase of the Analyst(R) business line. Since inception the
Company has used telemarketing and sales literature as its primary selling
tools. In June, 1998 the Company hired its first outside sales force to
enhance sales and marketing in the United States and Europe. The Company
believes this additional selling resource will increase sales and the
Company's market share during the current fiscal year.
Other expenses, net increased to approximately $100,000 from
approximately $34,000 (194%) This increase was the result of the increased
borrowings that were used to finance the Analyst purchase and estimated
translation losses associated with the devaluation of the Brazilian Real.
(See "Liquidity and Capital Resources").
Net income increased to approximately $361,000 from approximately
$69,000 (423%), primarily due to increase in sales. This was partially
offset by increases in cost of sales, SG&A expenses and other expenses.
Liquidity and Capital Resources
The Company has financed its capital expenditures, operating
requirements and growth primarily from the initial public offering of its
common stock, lease financing arrangements, cash flow from operations,
private placements completed in September 1995, and March 1996 and a
$5,000,000 line of credit provided by BankBoston N.A. which was put in place
on September 1, 1998.
On September 1, 1998 the Company purchased certain assets from Dade
related to a product line sold under the tradename Analyst. The Analyst
product line consists of both the Analyst bench top clinical chemistry
system and all the related consumables which are used in that system. The
assets included are accounts receivable, inventory, equipment, and certain
intellectual property. The Company agreed to assume certain of Dade's
liabilities including accounts payable, service contracts and warranty
obligations. Pursuant to the purchase and the related agreements, Dade will
continue to manufacture the products under a separate manufacturing
agreement for a period of up to thirty-six months while the Company
transitions the manufacturing operations to its facilities located in
Columbia, Maryland and San Diego, California. The Company intends to have
the instruments manufactured by Dade or some other suitable third party for
the foreseeable future.
Under the purchase agreement, at the closing, the Company paid
$3,500,000 in cash and issued a non-interest bearing promissory note (the
"Note") to Dade in the amount of $1,250,000. The Company agreed to pay Dade
in full on or before September 1, 2000. The Note and the purchase price are
subject to adjustment due to changes in working capital transferred at the
close of the purchase agreement. The Company has also agreed to pay Dade a
royalty on the sale of certain consumables for use with the Analyst
instrument.
The Company financed the acquisition using $3,500,000 in proceeds from
a $5,000,000 revolving credit line from BankBoston, N.A., which is secured
by all the assets of the Company and its subsidiaries.
The Analyst system uses a rotor based technology that is capable of
producing results of up to 14 different clinical chemistry tests in under
ten minutes. The rotor contains dry prepackaged reagents in tablet form.
Included tests include cholesterol, triglycerides, glucose, and total
protein. The Analyst is sold in point of care settings such as physician
office laboratories and veterinary office laboratories.
At December 31, 1998, the Company's working capital was approximately
$5,963,000 compared to working capital of approximately $5,446,000 at
September 30, 1998. This increase was primarily the result of the net income
for the period.
During the three months ended December 31, 1998, the Company generated
approximately $1,175,000 in cash from operating activities. This was the
result of the net income for the period, depreciation and amortization
expenses, a decrease in accounts receivable and an increase in accounts
payable and accrued expenses. This cash, along with existing cash balances,
was used to pay $1,248,000 of the Note to BankBoston (see above) and to
purchase property and equipment and other assets.
Inventory balances increased from approximately $6,212,000 at
September 30, 1998 to approximately $6,334,000 at December 31, 1998, in
support of an anticipated increase in product sales due to the increased
marketing efforts. The Company has begun a review of inventory levels to
systematically set them at appropriate levels.
Management believes its cash and cash equivalents and short-term
investments, together with anticipated cash flow from operations, are
sufficient to meet the Company's cash needs for its ongoing business.
Year 2000 Systems
The Company has undertaken a review concerning the ability of its
internal information systems, including its internal accounting systems, to
handle date information and to function appropriately from and after January
1, 2000, and does not believe that the total cost to address any changes
required as a result of the so-called "Year 2000 Problem" will be material.
In addition, the Company has evaluated the impact of possible Year 2000
problems encountered by its suppliers and customers upon the Company and
does not believe that any problems would have material effect upon the
Company.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards.
Statement of Financial Accounting Standards Board No. 130, "Reporting
Comprehensive Income",("SFAS No. 130") establishes standards for reporting
and display of comprehensive income, its components, and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires that all items that
are required to be recognized under current accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information", which supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise," establishes standards for the way that
public enterprises report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It
also establishes standards for disclosures regarding products and services,
geographic areas, and major customers. SFAS No. 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated by the chief operating decision
maker in deciding how to allocate resources and assessing performance.
Both of these new standards are effective for financial statements for
the periods beginning after December 15, 1997 and require comparative
information for earlier years to be restated. Management does not expect
implementation of these standards to materially affect future financial
statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires companies to recognize all derivatives contracts as either assets
or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss
recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are
attributed to the hedged risk or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of
change. SFAS 133 is effective for all fiscal years beginning after June 15,
1999.
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes. Accordingly,
the Company does not expect adoption of the new standard on October 1, 1999
to affect its financial statements.
Impact of Inflation
Domestic inflation during the last two fiscal years has not had a
significant effect on the Company's business activities. Translation and
transaction gains and losses between the Company and its subsidiary in
Brazil are expensed each period.
Stock Repurchase
The Company's Board of Directors has approved a program to repurchase
up to 100,000 shares of its common stock. On January 6, 1999 the Company
began to purchase shares in open market transactions. As of the date of
this report, all 100,000 shares authorized have been purchased.
PART II - Other Information
Items 1 through 5: Not applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
b) Reports on Form 8-K. On November 12, 1998 the Company filed a
Form 8K/A amending the following items, financial statements,
exhibits or other portions of the 8-K filed on September 1, 1998.
1. Amended to include financial information relating to the
assets of the Analyst business purchased by the Company and
the Company's pro-forma financial information.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Hemagen Diagnostics, Inc.
-------------------------
(Registrant)
January 28, 1999 /s/ Carl Franzblau
- ---------------------- --------------------------------
Carl Franzblau
Chief Executive Officer
January 28, 1999 /s/ William Franzblau
- ---------------------- --------------------------------
William Franzblau
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 168,654
<SECURITIES> 0
<RECEIVABLES> 3,387,611
<ALLOWANCES> 477,000
<INVENTORY> 6,334,110
<CURRENT-ASSETS> 9,835,786
<PP&E> 7,447,463
<DEPRECIATION> 3,203,523
<TOTAL-ASSETS> 15,472,465
<CURRENT-LIABILITIES> 3,272,527
<BONDS> 0
0
0
<COMMON> 78,519
<OTHER-SE> 10,510,023
<TOTAL-LIABILITY-AND-EQUITY> 15,472,465
<SALES> 4,679,101
<TOTAL-REVENUES> 4,679,101
<CGS> 2,773,640
<TOTAL-COSTS> 2,773,640
<OTHER-EXPENSES> 1,444,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,369
<INCOME-PRETAX> 361,211
<INCOME-TAX> 0
<INCOME-CONTINUING> 361,211
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 361,211
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
