U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MAY 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22720
CYCLO3PSS CORPORATION
(Name of Small Business Issuer as specified in its charter)
Delaware 87-0455642
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
3646 West 2100 South
Salt Lake City, Utah 84120-1202
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 972-9090
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$.001 Par Value Common Stock
Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 .
Common Stock outstanding at July 14, 1996 - 10,524,338 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
[PAGE]
FORM 10-QSB
Financial Statements and Schedules
CyclO3PSS Corporation
For Three Months Ended May 31, 1996
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-Q
Item 1. Financial Statements
Consolidated Balance Sheet. . . . . . . . . . . . . . . . . 3
Consolidated Statement of Operations. . . . . . . . . . . . 5
Consolidated Statement of Cash Flow . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . 14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders . . . . 14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 14
Item 6(a). Exhibits. . . . . . . . . . . . . . . . . . . . . . . . 14
Item 6(b). Reports on Form 8-K . . . . . . . . . . . . . . . . . 14
[PAGE]
CYCLO3PSS CORPORATION
Consolidated Balance Sheet
(UNAUDITED)
- ------------------------------------------------------------------------------
May 31 February 29
1996 1996
---------------------------
Assets
Current assets:
Cash $138,515 $252,113
Accounts Receivable, less allowance for
doubtful accounts of $40,138 at May 31, 1996
and February 29, 1996 75,850 77,130
Inventories, less reserve of $109,500 at
May 31, 1996 and $0 at February 29, 1996 297,346 408,889
Prepaid expenses 11,211 37,474
------- -------
Total current assets 522,922 775,606
Property and equipment, net 524,050 570,237
Other assets:
Goodwill, net 711,740 68,862
Acquired patents, net 442,879 453,456
Developed patents and other, net 109,952 110,457
------- -------
$2,311,543 $2,678,618
========== ==========
[PAGE]
CYCLO3PSS CORPORATION
Consolidated Balance Sheet (continued)
(UNAUDITED)
- ------------------------------------------------------------------------------
May 31 February 29
1996 1996
-----------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 99,319 162,414
Accrued liabilities 120,150 120,122
Deferred revenue 230,249 142,749
Current portion of capital lease obligations 12,496 16,351
------- -------
Total current liabilities 462,214 441,636
Long-term debt obligations 1,275,371 889,663
Long-term portion of capital lease
obligations 54,626 54,626
Commitments and contingencies
Stockholders' equity:
Series "A" preferred stock, par value $.01;
4,500,000 shares authorized; 35,638 shares
issued and outstanding 356 356
Series "B" preferred stock, par value $.01,
at stated value; 30,000 shares authorized;
none issued or outstanding -- --
Class "A" preferred stock, par value $.01;
500,000 shares authorized; none issued or
outstanding -- --
Common stock, par value $.001; 55,000,000
shares authorized; 10,524,338 shares issued
at May 31, 1996, 10,169,932 shares issued
at February 29, 1996 10,524 10,170
Additional paid-in capital 10,322,355 10,305,955
Accumulated deficit (9,312,358) (8,522,243)
Less treasury stock, 264,000 common
shares at cost (501,545) (501,545)
--------- ----------
Total stockholders' equity 628,832 1,292,693
--------- ----------
$2,311,543 $2,678,618
========= =========
See accompanying notes to consolidated financial statements
[PAGE]
CYCLO3PSS CORPORATION
Consolidated Statement of Operations
(UNAUDITED)
- ------------------------------------------------------------------------------
For the three months ended
May 31, 1996 May 31, 1995
------------------------------
Net Revenues $94,172 $98,464
Costs and expenses:
Cost of sales 115,610 37,877
Research and development 234,271 204,230
Selling and marketing 51,019 98,244
General and administrative 314,875 544,043
Depreciation and amortization 116,772 95,787
------- -------
Total Expenses 832,547 980,181
Loss from operations (738,375) (881,717)
Interest income 2,104 4,112
Interest expense (53,844) --
-------- -------
Loss on short-term investments -- --
Net loss $(790,115) $(877,605)
========= ==========
Net loss per common share $(.08) $ (.09)
========= ==========
Weighted average number of common shares
issued and outstanding 10,493,520 9,704,356
========== =========
See accompanying notes to consolidated financial statements.
[PAGE]
CYCLO3PSS CORPORATION
Consolidated Statement of Cash Flow
(UNAUDITED)
- ------------------------------------------------------------------------------
For the three months ended
May 31, 1996 May 31, 1995
----------------------------
Cash flows from operating activities:
Net loss $(790,115) $(877,605)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 116,772 95,787
Accrued interest on convertible debt
issuance 34,707 --
Issuance of warrant with convertible debt 16,400 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 1,280 (26,237)
(Increase) decrease in inventories 111,543 (71,817)
(Increase) decrease in prepaid expense,
developed patents, other 35,021 (33,459)
Decrease in accounts payable and accrued
liabilities (71,822) (58,991)
Increase in deferred revenue 87,500 66,668
-------- --------
Net cash used in operating activities (458,714) (905,654)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment 0 (16,831)
Proceeds from sale of short-term investments 0 810,241
Increase in other assets (2,383) --
Net cash provided by (used in) financing ------- --------
activities (2,383) 751,578
------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 354 3,700
Proceeds from issuance of convertible debt
obligations 351,000 --
Principal payments under capital lease
obligations (3,855) --
-------- -------
Net cash provided by (used in) financing
activities 347,499 3,700
-------- -------
Net decrease in cash (113,598) (108,544)
Cash at beginning of period 252,113 123,086
======= ========
Cash at end of period $138,515 $14,542
======== ========
Supplemental schedule of non-cash financing
activities:
Capital lease obligations incurred for
acquisition of property and equipment $ -- $41,832
========= ========
See accompanying notes to consolidated financial statements.
[PAGE]
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
Financial Statements
In the opinion of managment, the accompanying consolidated financial
statements contain all normal recurring adjustments necessary to present
fairly the financial position of CycO3PSS Corporation ("Company") as of May
31, 1996 and the results of its operations and cash flows for the interim
periods ended May 31, 1996 and May 31, 1995. The operating results for the
interim periods are not necessarily indicitive of the results for a full year.
These financial statements should be read in conjunction with the Company's
audited financial statments for the year ended February 29, 1996.
Organization
The Corporation was formed in Delaware in 1927. In 1990, the Corporation
was reorganized as CyclO3PSS Medical Systems, Inc. In 1995, the Company
changed its name to CyclO3PSS Corporation (the Company). The Company is
engaged in the research and development of technologies for the sterilization
and/or disinfection of surgical and medical instruments, the manufacture, sale
and installation of ozone washing and laundry sorting and counting systems
for commercial and institutional laundries, and the manufacture and sale of
specialty chemicals.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated.
Revenue Recognition
Revenue is recognized upon shipment, or in the case of washing and laundry
systems, upon installation and customer acceptance. Payments received from
customers prior to installation and customer acceptance are recorded as
deferred revenue.
Short-term Investments
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115)
which requires investment securities to be classified as either held to
maturity, trading or available for sale. The Company classifies its short-term
investments as available-for-sale. Available-for-sale securities are carried
at fair value, with unrealized gains and losses, net of tax, reported in a
separate component of stockholders' equity. Realized gains or losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in the statement of operations. The cost of
securities sold is based on the specific identification method. Interest on
securities classified as available-for-sale are included in interest income.
[PAGE]
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
Inventories
Inventories consist of raw materials and work-in-process and are stated at the
lower of cost or market, cost being determined using the first-in, first-out
method. An inventory reserve has been established as an estimate for the
possible design changes in review for the STER-O3-ZONETM 100. Inventories
consist of the following:
May 31 February 29
1996 1996
---------- ------------
Raw materials $286,407 $ 288,450
Work-in-process 120,439 120,439
Less: Inventory reserve (109,500) 0
---------- ---------
$297,346 $408,889
========== =========
Other Assets
Other assets consist primarily of goodwill and acquired patents which are
recorded at the lower of cost or their net realizable value. Goodwill is
amortized over five years. Acquired and developed patents are amortized on
a straight-line basis over the shorter of their estimated useful lives or
the remaining life of the patent. The Company periodically reviews the
recoverability of these intangible assets in order to record them at their
net realizable value.
Net Loss per Common Share
Net loss per common share is calculated based on the weighted average number
of shares of common stock issued and outstanding during the period. Common
stock equivalents are not included in the computation as their effect would be
anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
2. Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business.
The net loss for the quarted ended May 31, 1996 was $790,115. In the past the
Company has been able to receive funding necessary for its operations
through the issuance of common stock. The Company anticipates a net loss for
the year ended February 28, 1997.
[PAGE]
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
The Company believes that these conditions have resulted from the inherent
risks associated with small technology companies. Such risks include, but are
not limited to, the ability to (a) generate sales of its product at levels
sufficient to cover its costs and provide a return for investors, (b) attract
additional capital in order to finance growth, (c) further develop and
successfully market commercial products and (d) successfully compete with other
technology companies having financial, production and marketing resources
significantly greater than those of the Company.
The Company is trying to improve these conditions by way of financial
assistance through collaborative partnering agreements, closely held common
stock issuances, debt arrangements, and product sales. Management is
confident that appropriate funding will be generated and future product sales
will result from these opportunities and that the Company will continue
operations over the next fiscal year.
As of May 31, 1996 the Company has issued approximately $1,226,000 of debt
under the approved $3 million convertible debt offering (See Note 3).
Subsequent to the three months ended May 31, 1996, the Company became engaged
in an offering of Series "B" Preferred Stock. This Series "B" Preferred Stock
was designated by the Board of Directors on May 30, 1996. As of July 12, 1996,
$1,400,000 had been received in cash and subscriptions by the Company. The
Company will continue to pursue the closure of this offering as well as seeking
alternative methods of financing.
3. Long-Term Debt
During the year ended February 29, 1996, the Company's Board of Directors
approved the issuance of $3,000,000 in convertible debt to individual
investors. Principal and interest are payable in full three years from the
date of execution of each note. Interest accrues at 12% per year on the
principal balance. The debt is secured by all the assets of the Company. The
lender can convert all or a portion of its outstanding principal and interest
into shares of common stock at $3.50 per share. Under the terms of the loan
agreements, the Company will issue each lender a warrant to purchase 1,000
shares of the Company's common stock at a price of $4.00 per share for each
$3,500 principal amount loaned to the Company. Each warrant is exercisable
for a period of 5 years from the date of the closing of each loan. The Board
of Directors has reserved 2,022,714 shares of the Company's common stock for
the conversion of debt and exercise of warrants offered with the convertible
debt.
At May 31, 1996, the Company had issued $1,226,000 in convertible debt
(described above) to the Company's directors or major stockholders, with
maturities between December 1998 and February 1999. Interest expense of
$34,708, which is included in long-term debt, was recorded for the three
months ended May 31, 1996.
The carrying amount of long-term debt approximates fair value. The fair value
of the Company's long-term debt was estimated using discounted cash flow
analysis, based on the Company's current incremental borrowing rates for
similar types of debt arrangements.
[PAGE]
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------
4. Stockholders' Equity
On May 30, 1996 the Board of Directors designated Series "B" Preferred Stock
which consists of 30,000 shares of non-voting stock with a par value of $.01.
The stated value is $1,000 per share.
5. Contingencies
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes, based on advice of legal
counsel, that such litigation and claims will be resolved without material
effect on the Company's consolidated financial position, results of operations
or cash flows.
[PAGE]
PART I - ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company was an inactive corporation from the 1930's to 1987. From the
commencement of operations in 1987 until July of 1994, the Company was in the
development stage engaged primarily in the research and development of its
products. From the period since reactivation (March 2, 1987) to May 31, 1996,
the Company had incurred a cumulative net loss of approximately $9,202,858.
The Company expects to continue to incur losses into next year.
The Company's future operating results will depend on many factors, including
the timing of the FDA marketing clearance, the demand for the Company's medical
sterilization products at that time, and industry acceptance of the Company
laundry technologies, system equipment and attendant products. Additional
factors include the Company's ability to manufacture and market its products
on a cost-effective basis, the level of competition and the ability of the
Company to develop product enhancements and new products and to obtain the
required financing.
Results of Operations
The Company's revenues were $94,172 for the three months ended May 31, 1996,
and $98,464 for the three months ended May 31, 1995. Only two of the Company's
wholly owned subsidiaries are currently contributing to the Company's revenues,
CyclO3PSS Textile Systems, Inc. ("CTS") and CyclO3PSS Biochemical Corporation
(CBC). The Company's gross margin for the three months ended May 31, 1996 was
$(21,438) compared to $60,587 for the three months ended May 31, 1995. This
decrease in gross margin is primarily attributable to the reduction of CTS
sales as the result of the Company's decision to interrupt the direct sale of
systems until the redesign effort was completed and dependable systems could
be reintroduced to the market.
Research and development expenditures of $234,271 for the three months ended
May 31, 1996, and $204,230 for the three months ended May 31, 1995. Management
sees no continued overall reduction of research and development expenses. These
costs will continue to be expended as certain products complete the development
process and are commercialized.
The Company incurred general and administrative expenses of $314,875 for
the three months ended May 31, 1996, compared to $544,043 for the three months
ended May 31, 1995. This decrease is due in part to a decrease in staffing.
At quarter end May 31, 1996, the Company had 19 full time employees, compared
to 42 full time employees at quarter end May 31, 1995. Management has taken
aggressive steps to reduce current monthly expenses. As the Company completes
development on certain products and prepares for commercialization, the human
resource requirements of the Company will change.
[PAGE]
The Company incurred selling and marketing expenses of $51,019 for the three
months ended May 31, 1996, compared to $98,244 for the three months ended May
31, 1995. The Company anticipates marketing expenses to increase slightly in
the fiscal year 1997 due to the hiring and training of additional marketing
personnel and the attendant costs related to their endeavors. The Company will
also increase marketing activity and incur additional expenses should it
receive positive indications from the FDA as to marketing clearance for its
medical sterilization systems during the year 1997.
For the three months ended May 31, 1996, the Company had interest income of
$2,104 as compared to interest income for the three months ended May 31, 1995,
of $4,112. This reduction was due to a decrease in the amount of cash on hand.
The cash position of the Company has been depleted as funds for operations have
been required. The Company incurred $53,844 in interest expense for the three
months ended May 31, 1996. $19,136 is attributable to the result of equipment
leasing arrangements. $34,708 is the interest amount accrued in conjunction
with the convertible debt offering (see discussion below under Liquidity and
Capital Resources in regards to this debt offering). The Company anticipates
that this amount will continue to increase due to the convertible debt
currently being recorded.
The Company's net loss for the three months ended May 31, 1996 was $680,615,
as compared to the three months ended May 31, 1995 of $877,605. The Company
anticipates that it will operate at a loss for the year ended February 28,
1997. However, it is anticipated that the losses should begin to diminish if
and when the revenues of CyclO3PSS Textile Systems, Inc. begin to be generated.
Liquidity and Capital Resources
Subsequent to the three months ended May 31, 1996, the Company became engaged
in an offering of Series "B" Preferred Stock. This Series "B" Preferred Stock
was designated by the Board of Directors on May 30, 1996. Subsequent to May
31, 1996, $1,400,000 had been received in cash and subscriptions by the
Company. The Company will continue to pursue the closure of this offering as
well as seeking alternative methods of financing in order to secure the future
cash requirements of the Company as needed. There are no assurances that the
efforts to locate and secure additional financing will be successful. The
failure to secure this financing would substantially alter the management's
assumptions as presented in the remainder of this section.
Cash used in operating activities was $458,714 for the three months ended May
31, 1996, compared to $905,654 for the three months ended May 31, 1995.
Cash provided from investing activities which have been used to fund operations
for the three months ended May 31, 1996 was zero since the Company sold all of
its short-term investments, compared to $810,241 for the three months ended May
31, 1995. Cash used for the three months ended May 31, 1996 was comprised of
cash on hand and collections of accounts receivable, which is comprised of
service and part sales from CyclO3PSS Textile Systems, Inc. and contract
development and chemical compound sales from CyclO3PSS Biochemical Corporation.
Cash provided from issuance of convertible debt was $351,000 for the three
months ended May 31, 1996, compared to zero for the three months ended
May 31, 1996.
Total assets decreased to $2,311,543 for the three months ended May 31, 1996
from $2,729,972 for the three months ended May 31, 1995, primarily due to the
decrease in the Company cash , as described above.
Total current liabilities decreased slightly to $462,214 for the three months
ended May 31, 1996 from $484,630 for the three months ended May 31, 1996. All
of the Company's current liabilities at May 31, 1996 were attributed to
accounts payable, accruals and deferred revenues, and the current portion of
certain capital equipment leases. Long term liabilities increased to
$1,329,997 for the three months ended May 31, 1996 from $31,820 for the three
months ended May 31, 1996. Of the total, $1,275,371 represents principal and
interest debt generated on one of the Company 's financing which was an
offering of convertible debt instruments. The additional $54,626 represents
the long term portion of leases payable for certain leased equipment, compared
to $31,820 for the three months ended May 31, 1995.
[PAGE]
On October 17, 1995 the Board of Directors approved the issuance of a up to
$3,000,000 of Convertible Secured Promissory Notes to investors. The
Convertible Notes which include warrants to purchase shares of the Company's
restricted common stock at $4.00 per share, also bear interest at a rate of 12%
per annum. Both the interest and principal are convertible to shares of the
Company's restricted common stock at $3.50 per share. The conversion shares
and warrants carry certain registration rights and requirements. These notes
are secured by all assets of the Company. As of May 31, 1996, $1,226,000 had
been received from this offering.
Plan of Operation
Should the Company complete the financing required, the anticipated plan of
operation during the next twelve (12) months is to complete the following:
1. The engagement of an Engineering Consulting Firm to review the
engineering and design elements of the STER-O3-ZONETM 100 in
order to determine an efficient and cost effective manner in
which to correct certain process controls of the system.
2. Evaluate and determine the timeline required to execute the
design changes to the STER-03-ZONETM 100. Determine what
action to take with the FDA in respect to the current pending
application of the Company's 510(k) Premarket Notification for
the STER-O3-ZONETM 100. The Company will not engage in any
pre-approval sales under the Investigational Device Exemption
(IDE) of the STER-O3-ZONETM 100 until the design changes have
been fully resolved.
3. Continuation of validation testing of the Company's liquid
chemical sterilant, SterOxTM, preparatory to submission of the
510(k) Premarket Notification to the FDA. To be determined is
whether this will be completed by the Company or with a market
leader of liquid disinfectants (currently in negotiation)
resulting in a possible licensing agreement to complete the
testing on this product as well as formalization of the
application and presentation of SterOxTM to the FDA.
4. Continued development of products and enhancements for the
Company's textile operations which include:
(1) Completion of validation of testing of the application for
cold water ozone disinfection of health care textiles.
(2) Reintroduction and sales of the Company's revised and
modified Vacuum Soils Counting System (VAC) and ozone washing
systems.
(3) Aggressive marketing of the revised and modified textile
products. Additional plans to market through proposed
strategic alliances with parties currently in negotiations.
5. Continuation of contract research and development within the
Biochemical subsidiary and the ongoing manufacture and sales
of its existing and future speciality chemicals product line.
6. With appropriate financing in place, there may be additional
diversification of the Company's business activities through
future acquisitions.
[PAGE]
Although the Company will be primarily engaged in the aggressive sales and
support of its completed products, it anticipates that research and development
expenses will be ongoing, and could range from $800,000 to $1,000,000 during
the next twelve months in support of the completion of key future products.
The Company currently anticipates that its expenditures on equipment will range
from $200,000 - $400,000 during the next twelve months based upon current
manufacturing assumptions, assuming that the required financing is obtained.
Management has taken aggressive steps to reduce current monthly expenses by
reducing personnel. The Company anticipates that no more than six additional
employees will be hired during the next twelve months, unless: (1). the market
acceptance of the textile systems is accelerated; (2). the sterilizer products
are approved by the FDA in a more timely manner than management predicts. It
is anticipated that general and administrative expenses would not increase by
more than $200,000 on an annualized basis as a result of any such increase in
employees.
The information set forth herein as to anticipated research and development
costs, equipment purchases and increase in employees are management's best
estimate based upon current plans. Actual expenditures may be greater or less
than such estimates depending on many factors including, but not limited to:
the FDA review process, the availability of new technologies, marketing efforts
and the successful acquisition of needed capital.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. On May 30, 1996, the Board of Directors
designated a Series "B" Preferred Stock for an offering to
raise capital for ongoing cash requirements.
As of July 12, 1996 $1,400,000 has been received by the
Company in this offering.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Forms 8 - K. No Form 8-K's were filed during
the quarter ended May 31, 1996.
[PAGE]
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned, t
hereunto duly authorized.
CYCLO3PSS CORPORATION
Date: July 12, 1996 By/s/ John M. Williams
John M. Williams
Chief Executive Officer
Chairman
Principal Executive Officer
Date: July 12, 1996 By/s/ Alice L. Hart
Alice L. Hart
Controller, Corporate Secretary
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CYCLOPSS
CORPORATION'S MAY 31, 1996 FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-31-1996
<CASH> 138,515
<SECURITIES> 0
<RECEIVABLES> 78,850
<ALLOWANCES> 0
<INVENTORY> 406,846
<CURRENT-ASSETS> 632,422
<PP&E> 11,211
<DEPRECIATION> 0
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<CURRENT-LIABILITIES> 462,214
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0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 462,214
<SALES> 94,172
<TOTAL-REVENUES> 0
<CGS> 115,610
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<OTHER-EXPENSES> 832,547
<LOSS-PROVISION> 628,875
<INTEREST-EXPENSE> 53,844
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