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 September 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 0-25136
NEURO NAVIGATIONAL CORPORATION
______________________________
(Name of Small Business Issuer as specified in its charter)
Delaware 33-0464753
______________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3180 Pullman Street, Costa Mesa, California 92626
_________________________________________________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (714) 557-9111
______________
Check whether the issuer (1) has filed all reports required by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the
past 90 days: YES [X] NO [ ]
There were 9,933,733 shares of the issuer's Common Stock outstanding as
of October 29, 1996.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NEURO NAVIGATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
September 30, December 31,
1996 1995
_____________ ____________
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $50,211 $280,115
ACCOUNTS RECEIVABLE-NET 262,112 390,728
INVENTORY 1,530,993 1,270,311
PREPAID EXPENSES 39,281 66,451
_________ _________
TOTAL CURRENT ASSETS 1,882,597 2,007,605
FURNITURE & EQUIPMENT (NET) 349,816 229,139
DEPOSITS 6,223 90,248
__________ __________
TOTAL ASSETS $2,238,636 $2,326,992
========== ==========
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
OBLIGATION UNDER CAPITAL LEASE,
CURRENT PORTION $1,984 $1,759
NOTES PAYABLE - BALLARD MEDICAL PRODUCTS 2,405,000
ACCOUNTS PAYABLE & ACCRUED EXPENSES 353,437 594,149
_________ _______
TOTAL CURRENT LIABILITIES 2,760,421 595,908
OBLIGATION UNDER CAPITAL LEASE,
NET OFCURRENT PORTION 4,549 6,090
_________ _______
TOTAL LIABILITIES 2,764,970 601,998
_________ _______
CONVERTIBLE REDEEMABLE PREFERRED STOCK,
$0.01 PAR VALUE, $10 PER SHARE LIQUIDATION
VALUE, 1,000,000 SHARES AUTHORIZED,
200,000 SHARES ISSUED AND OUTSTANDING 1,867,795 1,867,795
_________ _________
STOCKHOLDERS' DEFICIT:
COMMON STOCK,$ 0.001 PAR VALUE, 40,000,000
SHARES AUTHORIZED, 9,933,733
OUTSTANDING 9,934 9,934
ADDITIONAL PAID IN CAPITAL 13,847,536 13,848,284
ACCUMULATED DEFICIT (16,251,599) <14,001,019)
____________ ___________
TOTAL STOCKHOLDERS' DEFICIT (2,394,129) (142,801)
____________ ___________
TOTAL LIABILITIES, REDEEMABLE STOCK AND
STOCKHOLDERS' DEFICIT $2,238,636 $2,326,992
========== ==========
2 of 15
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
NEURO NAVIGATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
________ ________ __________ __________
<S> <C> <C> <C> <C>
SALES $380,826 $696,053 $1,687,750 $1,701,320
COST OF GOODS SOLD 230,875 461,775 1,121,291 1,292,350
_______ _______ _________ _________
149,951 234,278 566,459 408,970
_______ _______ _________ _________
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT 257,041 317,621 780,415 1,101,990
SALES AND MARKETING 395,813 374,993 1,280,903 1,060,833
GENERAL AND ADMINISTRATIVE 224,496 254,356 669,348 784,478
_______ _______ _________ _________
877,350 946,970 2,730,666 2,947,301
_______ _______ _________ _________
OTHER (INCOME) EXPENSE:
INTEREST INCOME, NET 49,202 7,665 90,650 (8,307)
OTHER (6,676) (581) (7,877) (27,380)
______ _____ ______ ________
42,526 7,084 82,773 (35,687)
______ _____ ______ ________
LOSS BEFORE PROVISION FOR
INCOME TAXES (769,925) (719,776) (2,246,980) (2,502,644)
PROVISION FOR STATE
INCOME TAXES 3,600 3,350
__________ _________ ___________ ___________
NET LOSS ($769,925) ($719,776) ($2,250,580) ($2,505,994)
========== ========= =========== ===========
NET LOSS PER COMMON SHARE ($0.08) ($0.07) ($0.23) ($0.25)
========== ========= =========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 9,933,733 9,933,733 9,933,733 9,933,733
========= ========= ========= =========
3 of 15
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
NEURO NAVIGATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
NINE MONTHS AND YEAR TO DATE ENDED
SEPTEMBER 30,
<CAPTION>
1996 1995
___________ ___________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS FOR THE PERIOD ($2,250,580) ($2,505,994)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 68,211 70,953
(INCREASE) DECREASE IN ACCOUNTS
RECEIVABLE 128,616 (105,725)
INCREASE IN INVENTORY (260,682) (154,921)
DECREASE IN PREPAID EXPENSES 27,170 24,034
INCREASE (DECREASE) IN ACCOUNTS
PAYABLE AND ACCRUED EXPENSES (240,712) 391,492
__________ ________
(277,397) 225,833
__________ ________
NET CASH USED BY OPERATING ACTIVITIES (2,527,977) (2,280,161)
___________ ___________
CASH USED BY INVESTING ACTIVITIES:
PURCHASE OF PROPERTY AND EQUIPMENT (188,888)
DECREASE (INCREASE) IN DEPOSITS 84,025 (4,310)
_________ ________
NET CASH USED BY INVESTING ACTIVITIES (104,863) (4,310)
_________ ________
CASH PROVIDED BY FINANCING ACTIVITIES:
DEFERRED ISSUANCE COSTS (748) (93,579)
PROCEEDS FROM NOTES PAYABLE 2,405,000 900,000
PAYMENTS & CURRENT MATURITIES OF
NOTES PAYABLE (1,316) (1,100)
_________ ________
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,402,936 805,321
_________ ________
NET DECREASE IN CASH AND
CASH EQUIVALENTS (229,904) (1,479,150)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 280,115 1,658,114
_______ _________
CASH AND CASH EQUIVALENTS,
END OF PERIOD $50,211 $178,964
======= =========
4 of 15
<FN>
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
NEURO NAVIGATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ending September 30, 1996
(Unaudited)
1. Summary of Significant Accounting Policies:
Basis Of Presentation:
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Endovascular, Inc., a California
corporation. All intercompany accounts and transactions have been
eliminated in consolidation.
Although unaudited, the interim consolidated financial statements in this
report reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement of
financial position, results of operations and cash flows for the interim
periods covered and of the financial condition of the Company at the interim
balance sheet dates. The results of operations for the interim periods
presented are not necessarily indicative of the results expected for the
entire year.
The year-end balance sheet information was derived from audited consolidated
financial statements, but does not include all disclosures required by
generally accepted accounting principles. These consolidated financial
statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995.
2. Inventory:
Inventories are stated at the lower of cost (first-in, first-out) or market
and consists of the following:
(Unaudited)
September 30, December 31,
1996 1995
__________ ____________
Raw materials $571,070 $507,045
Work in process 194,266 144,218
Finished goods 765,657 619,048
_______ _______
$1,530,993 $1,270,311
========== ==========
5 of 15
<PAGE>
NEURO NAVIGATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,
(CONTINUED)
For the Period Ending September 30, 1996
(Unaudited)
3. Property And Equipment:
Property and equipment consist of the following:
(Unaudited)
September 30, December 31,
1996 1995
____________ ____________
Office furniture $216,867 $216,867
Equipment 432,086 243,199
Leasehold improvements 93,452 93,452
_______ _______
742,405 553,518
Less, Accumulated depreciation
and amortization (392,589) (324,379)
_________ _________
$349,816 $229,139
========= =========
4. Notes Payable:
Notes payable consist of the following:
(Unaudited)
September 30,1996
Notes payable to Ballard Medical
Products, collateralized by
substantially all assets of the
Company, bearing interest at 10%,
due January 19, 1997 $2,405,000
==========
5. Net Loss Per Share:
Net loss per share is based on the reported net loss
divided by the weighted average number of outstanding shares. Outstanding
warrants and or options have not been included in this calculation as their
effect would be anti-dilutive.
6 of 15
<PAGE>
NEURO NAVIGATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
For the Period Ending September 30, 1996
(Unaudited)
6. Investment by Ballard Medical Products:
On November 13, 1995, the Company issued and sold to Ballard Medical
Products, a Utah corporation ("BMP") 200,000 shares of Series A Preferred
Stock ("Preferred Stock") which upon conversion represents 19.5% of the
Company's capital stock for US$2 million pursuant to a Stock Purchase and
Option Agreement dated July 17, 1995 (the "BMP Agreement"). Under the BMP
agreement, BMP paid to the Company US$500,000 as nonrefundable consideration
for an option ("BMP Option") to acquire all of the assets of the Company
during the 24 month period following the closing of the sale of the Preferred
Stock. If BMP exercises the BMP Option within the firs twelve months after
such closing, the asset purchase price will be US$9,500,000. If the BMP
Option is exercised at any time during the remainder of the option term, the
asset purchase price will be equal to the product of two (2) multiplied by
the net sales of the Company for the twelve (12) full calendar months
immediately preceding the date of exercise. BMP will receive credit for
option consideration already paid,aby liabilities assumed by BMP and loans
made to the Company by BMP and the balance of any liquid assets retained
by the Company at closing. If the BMP Option is exercised and the assets
are purchased, the Stock issued to BMP will be redeemed in cash by the
Company at a redemption price equal to 19.5% of the Company's cash and cash
equivalents on hand after the close of the asset sale less any retained
liabilities. BMP has also agreed to provide a line of credit up to
$500,000 commencing eight months after the closing of the sale of Preferred
Stock to finance operating expenses.
Under the BMP Agreement two nominees of BMP serve on the Company's Board of
Directors, and the Company's conduct of its business will be subject to
certain restrictions, during the option term. The Company will indemnify
BMP against certain losses in connection with the transaction and 10% of the
asset purchase price will be escrowed to secure the Company's indemnification
obligation.
7 of 15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's quarterly operating results have been and will continue to be
affected by a wide variety of factors that could materially and adversely
affect revenues and profitability. These include factors relating to
competition, such as competitive pricing pressure and the potential
introduction of new products by competitors; manufacturing factors, including
constraints in the Company's manufacturing and assembly operations and
shortages or increases in the prices of raw materials and components; sales
and distribution factors, such as changes inproduct mix or distribution
channels resulting in lower margins, the loss of a significant distributor or
sales representative, product returns and exchanges; new product
development, marketing and clinical trial expenses associated with new
product introductions, and delays in the introduction of new products and
technologies; aswell as other factors, including levels of expense relative to
revenue levels, personnel changes, expenses that may be incurred in litigation,
and fluctuations in foreign currency exchange rates. The Company has
experienced and expects to continue to experience significant fluctiations in
operating results, and there can be no assurance that the Company will
achieve profitability in the future.
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto appearing elsewhere in this Quarterly Report
on Form 10-QSB. In addition the Company desires to take advantage of
certain provisions of the Private Securities Litigation Reform Act of 1995
that provide a "safe harbor" for forward looking statements made by or on
behalf of the Company. Except for the historical information contained
herein, the matters discussed herein are forward looking statements, the
accuracy of which is necessarily subject to risks and uncertainties.
Specifically, the Company wishes to alert readers that the aforementioned
factors as well as the factors set forth under "Risk Factors" contained
in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995, in the past have affected and in the future could affect
the Company's results for future periods to differ materially from those
expressed in any forward looking statements made by or on behalf of the
Company.
Net Sales
Net Sales decreased to $380,826 for the three months ended September 30, 1996
as compared to $696,053 for the three months ended September 30, 1995, a
decrease of 45%. Net Sales for the nine months ended September 30, 1996
decreased to $1,687,750 as compared to $1,701,320 for the nine months ended
September 30, 1995, a decrease of 1%.
8 of 15
<PAGE>
The decreases in net sales for both the quarter and year to date were as a
result of two factors. First the Company did not realize any sales of its
visualization carts during the quarter ending September 30, 1996 as compared
to seven (7) visualization carts sold in the quarter ending
September 30, 1995. The sales prices of the Company's visualization carts
range from $42,995 to $63,995 as compared to its disposable products and
rigid rod lens scopes which have sales prices from $160 to $5,500. The
absence of revenue from the sale of visualization carts in the third quarter
affected both the quarterly sales as well as year to date sales as
compared to the comparable periods in the previous year.
Second, the quarter and nine months ended September 30, 1995 included stocking
orders from the Company's distributor in Japan. Both of these factors
accounted for the decrease in net sales for the quarter and nine months
ended September 30, 1996 as compared to the comparable periods in 1995.
Gross Profit
Gross Profit decreased to $149,951 for the three months ended
September 30, 1996 as compared to a gross profit of $234,278 for the three
months ended September 30, 1995, a decrease of 36%. Gross Profit for the
nine months ended September 30, 1996 increased to $566,459 as compared to a
gross profit of $408,970 for the nine months ended September 30, 1995, an
increase of 39%.
The decreases in gross profit for the quarter ending September 30, 1996 were
attributable to the decrease in sales for the same period. The increase in
gross profit for the nine months ended September 30, 1996 was due to
increased yields in manufacturing and the absorption of manufacturing
overhead and fixed costs as compared to the nine months ended
September 30, 1995.
While the Company currently believes it is unlikely that variable costs will
increase unexpectedly in the foreseeable future, there can be no assurance
that such unexpected increase will not occur, and such an unexpected
increase could prevent or delay the Company's achievement of increases in
gross margins.
Research and Development
Research and Development expenses represent the Company's investment in the
advancement of less invasive technology in the fields of neuro and vascular
surgery. These expenses decreased to $257,041 for the three months ended
September 30, 1996 from $317,621 for the three months ended
September 30, 1995, a decrease of 19%. Research and Development expenses
for the nine months ended September 30, 1996 were $780,415 as compared to
$1,101,990 for the nine months ended September 30, 1995, a decrease of 29%.
9 of 15
<PAGE>
The decreases for both the quarter and nine months ended September 30, 1996
were due to a reduction in personnel and related benefit costs and decreases
in expenses related to the development of the Company's vascular products,
including clinical and regulatory submissions.
Sales and Marketing Expenses
Sales and Marketing expenses were $395,813 for the three months ended
September 30, 1996 as compared to $374,993 for the three months ended
September 30, 1995, an increase of 5%. Sales and Marketing expenses
increased to $1,280,903 for the nine months ended September 30, 1996 as
compared to $1,060,833 for the nine months ended September 30, 1995, an
increase of 21%.
The increases for both the quarter and nine months ended September 30, 1996
were the result of increased selling costs associated with enhanced efforts
in the promotion and marketing of products, personnel and related benefit
costs, attendance at and hosting of clinical education seminars, and
participation in trade shows.
General and Administrative Expenses
General and Administrative expenses were $224,496 for the three months ended
September 30, 1996 as compared to $254,356 for the three months ended
September 30, 1995 a decrease of 12%. General and administrative expenses
were $669,348 for the nine months ended September 30, 1996 as compared to
$784,478 for the nine months ended September 30, 1995, a decrease of 15%.
The decreases for the quarter and nine months ended September 30, 1996 were
due primarily to lower insurance premiums for product liability coverage
and Directors and Officers liability insurance and a decrease in consulting
and legal fees.
Net Loss
Net Loss for the three months ended September 30, 1996 was $769,925 as
compared to $719,776 for the three months ended September 30, 1995, an
increase of 7%. Net Loss for the nine months ended September 30, 1996 was
$2,250,580 as compared to $2,505,994 for the nine months ended
September 30, 1995, a decrease of 10%.
The increase of 7% for the quarter ended September 30, 1996 is attributable
to the decrease in net sales. The decrease of 10% for the nine months ended
September 30, 1996 is attributable to increased gross profit combined with
an overall reduction in operating expenses.
10 of 15
<PAGE>
Liquidity and Capital Resources
The Company has a working capital deficit of ($877,824) at September 30, 1996
as compared to working capital of $1,411,697 at December 31, 1995, or a
decrease of $2,289,521. The Company expects to incur substantial additional
operating losses as a result of expenditures related to the marketing and
sales support functions, research and product development activities,
initiation and completion of clinical trials for current and future products
and establishment of increased manufacturing capacity. The timing and
amounts of these expenditures will depend upon many factors, some of which
are beyond the Company's control, such as the results of clinical trials,
the requirements for and time required to obtain approval of 510(k)
applications or other regulatory approvals, the progress of the Company's
research and development programs, and market acceptance of the Company's
products.
The Company's cash resources are minimal and through the period ending
October 23, 1996 the Company has borrowed $2,570,000 from BMP to fund
operations. The BMP Agreement provided for a line of credit up to $500,000
to finance operating expenses. The Company began borrowings against this
credit facility in January 1996 and as of October 23, 1996 the Company has
borrowed $2,070,000 in addition to the line of credit for a total of
$2,570,000. There is no guarantee that BMP will continue lending money to
the Company to fund ongoing operations.
The Company currently has no commitments for any other credit facilities
such as revolving loans or lines of credit that could provide additional
working capital. Given the current sales volume and applications of cash,
the Company expects that further capital additions will be necessary to
sustain growth until the Company becomes cash positive. As described in
Note 6 to the Notes to Consolidated Financial Statements set forth above,
on November 13, 1995, Ballard Medical Products, a Utah corporation
("BMP"), obtained the option to acquire all of the Company's assets
during the 24-month period commencing November 13, 1995. BMP has indicated
an interest in exercising the option and selling the acquired assets and
with the assistance of the Comapny, retained a financial advisor to assist
in arranging such a transaction. The Company and Ballard are contemplating
a number of alternatives including the sale of the Company's assets,
corporate partnerships and a separate financing of its vascular subsidiary.
There can be no assurance that any such transactions will be available at
terms acceptable to the Company, that any financing transaction will not
be dilutive to current stockholders, or that the Company will have
sufficient working capital to fund future operations.
11 of 15
<PAGE>
PART II - OTHER INFORMATION
Items 1,2,3,and 4 are not applicable and have been omitted.
Item 5. Other Information
The Company's former independent accountant, Coopers & Lybrand L.L.P.,
("Coopers") resigned from that capacity on November 8, 1996.
The report by Coopers on the financial statements of the Company dated
March 1, 1996, including consolidated balance sheets as of December 31,
1995 and 1994, and the related consolidated statements of operations, cash
flows and statement of stockholders' equity (deficit) for the years then
ended did not contain an adverse opinion or a disclaimer of opinion, and
was not qualified or modified as to uncertainty, audit scope or
accounting principles except that the report contained a going concern
qualification.
The former independent accountants resigned from their position on
November 8, 1996. The resignation was not presented to or considered by
the Board of Directors or any audit or similar committee of the Board and,
therefor, the decision was not recommended or approved by the Board or
any such committee.
During the period covered by the financial statements through the date of
resignation of the former accountants, there were no disagreements with the
former accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
A letter from the former independent accountants for the Company is attached
as an exhibit to this For 10-QSB.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
16.1 Letter from Coopers & Lybrand, L.L.P., former independent
accountants for the Company.
b. No reports on Form 8-K were filed by the Company during the
period covered by this report.
12 OF 15
<PAGE>
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 by the
undersigned thereunto duly authorized.
Neuro Navigational Corporation
Dated: November 12, 1996 By: /s/ BRETT L. SCOTT
_______________________________________
Brett L. Scott, Chief Financial Officer
and Secretary (Authorized Signatory
and Principal Financial & Accounting Officer)
13 OF 15
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description Page
_________ _____________________ _______
16.1 Letter from Coopers & Lybrand, L.L.P., former 14
independent accountants for the Company.
27 Financial Data Schedule 15
November 13, 1996
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by Neuro Navigational Corporation (copy
attached) which we understand will be filed with the Commission, under
Item 5 of Form 10-QSB. We agree with the statements concerning our Firm
in Item 5 of such Form 10-QSB.
Very Truly Yours,
Coopers & Lybrand, L.L.P.
14 OF 15
<PAGE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEURO
NAVIGATIONAL CORPORATION FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AS SHOWN IN THE 10-QSB FILING
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 50,211
<SECURITIES> 0
<RECEIVABLES> 262,112
<ALLOWANCES> 0
<INVENTORY> 1,530,993
<CURRENT-ASSETS> 1,882,597
<PP&E> 349,816
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,238,636
<CURRENT-LIABILITIES> 2,760,421
<BONDS> 0
1,867,795
0
<COMMON> 9,934
<OTHER-SE> 13,847,536
<TOTAL-LIABILITY-AND-EQUITY> 2,238,636
<SALES> 1,687,750
<TOTAL-REVENUES> 1,687,750
<CGS> 1,121,291
<TOTAL-COSTS> 1,121,291
<OTHER-EXPENSES> 2,730,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,650
<INCOME-PRETAX> (2,246,980)
<INCOME-TAX> 3,600
<INCOME-CONTINUING> (2,250,580)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,250,580)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
