<PAGE>
UNITED STATES
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 ACT
OF 1934
For the quarterly period ended MARCH 31, 1999
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
-------------------------------------------------
Commission File Number 0-21832
---------------------------------------------------------
TurboSonic Technologies, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1949528
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
550 Parkside Drive, Suite A-14, Waterloo, Ontario, Canada N2L 5V4
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
519-885-5513
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the proceeding 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN A BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of March 31, 1999
10,000,000 shares of common stock were outstanding.
<PAGE>
TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES
Form 10-QSB
INDEX
PART 1 - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Item 1.
Consolidated Statements of Operations
(Unaudited) for the Three Months and the Nine Months
Ended March 31, 1999 and 1998 3
Consolidated Balance Sheets
at March 31, 1999 (Unaudited) and June 30, 1998 (Audited) 4
Consolidated Statements of Cash Flow
(Unaudited) for the Nine Months Ended
March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements
(Unaudited) 6-8
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-11
PART 11 - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a
Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature
<PAGE>
TURBOSONIC TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Operations
US dollars
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
March 31, 1999 March 31, 1998 March 31, 1999 March 31, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Original equipment revenue $ 583,146 $ 125,789 $1,515,427 $1,382,124
Rehabiliataion, maintenance and
spare parts revenue 459,287 341,882 1,527,309 917,391
-------------- -------------- -------------- --------------
Total Revenue 1,042,433 467,671 3,042,736 2,299,515
-------------- -------------- -------------- --------------
Cost of Original Equipment 327,298 116,901 894,834 1,017,399
Cost of rehabilitation, maintenance
and spare parts 285,363 211,571 968,991 529,481
Total cost of goods sold -------------- -------------- -------------- --------------
612,661 328,472 1,863,825 1,546,880
-------------- -------------- -------------- --------------
Gross Profit 429,772 139,199 1,178,911 752,635
Selling, general and administrative
expenses 373,064 445,014 967,262 1,213,206
Depreciation and amortization 48,973 55,771 146,152 151,877
Debt Conversion Inducement Expense 0 0 0 94,675
-------------- -------------- -------------- --------------
Total Expenses 422,037 500,785 1,113,414 1,459,758
-------------- -------------- -------------- --------------
Gain (Loss) from Operations 7,735 (361,586) 65,497 (707,123)
Interest Income (Expense) (4,528) (190) (14,034) 12,479 (a)
-------------- -------------- -------------- --------------
Net Income (Loss) before taxes 3,207 (361,776) 51,463 (694,644)
-------------- -------------- -------------- --------------
Tax Provision 0 0 0 2,055
-------------- -------------- -------------- --------------
Net Income (Loss) after taxes $3,207 ($361,776) $51,463 ($696,699)
============== ============== ============== ==============
Weighted average number of shares 10,000,000 8,036,393 10,000,000 8,036,393
outstanding
Incremental shares using treasury 10,500,00 8,236,393(b) 10,500,000 8,236,393(b)
method
Basic EPS $0.000 ($0.045) $0.005 ($0.087)
Diluted EPS $0.000 ($0.044) $0.005 ($0.085)
</TABLE>
(a) restated to reflect impact of CVF interest forgiveness on equity
rather than income;
(b) no incremental shares related to options are included due to the
loss in the 1st and 2d quarters of fiscal '98.
-3-
<PAGE>
TURBOSONIC TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(US dollars)
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
Assets (Unaudited) (audited)
-------------- -------------
<S> <C> <C>
Current Assets:
Cash $ 103,304 $ 69,277
Contracts and accounts receivable, net of allowance
for doubtful accounts of $57,046 and $101,941 802,366 491,137
Deferred contract costs and unbilled revenue 113,699 52,764
Inventories 126,937 137,388
Income Tax Receivable 28,890 29,135
Other current assets 94,076 111,286
-------------- -------------
Total current assets 1,269,272 890,987
Equipment and leasehold improvements,
at cost, net of accumulated depreciation 90,484 113,489
Investment in unconsolidated subsidiaries 10,755 10,746
Patents, less accumulated amortization 1 1
Goodwill 1,281,652 1,395,943
Other assets 9,660 9,660
-------------- -------------
Total Assets $2,661,824 $2,420,826
============== =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable & accrued expenses $ 878,843 $ 865,670
Billings in excess of costs and estimated
earnings on uncompleted contracts 177,170 163,752
1,056,013 1,029,422
Accrued Expenses 115,301 152,262
Loans from Shareholders [Note 4] 193,651 -
-------------- -------------
1,364,965 1,181,684
Stockholders' Equity:
Authorized Share Capital
21,800,000 common shares par value $0.10 per share
8,200,000 exchangeable common shares par value
$0.10 per share
Issued Share Capital
1,800,000 common shares - -
8,200,000 exchangeable shares 2,247,334 2,247,334
Additional paid - in capital [Note 4] 1,445,927 1,439,586
------------------ ---------------
3,693,261 3,686,920
Currency translation adjustments (18,471) (18,384)
Accumulated deficit (2,377,931) (2,429,394)
------------------- ---------------
Total stockholders' equity 1,296,859 1,239,142
Total Liabilities and Stockholders' Equity $2,661,824 $2,420,826
=================== ================
</TABLE>
-4-
<PAGE>
TURBOSONIC TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
for the nine months ended March 31, 1999 and 1998
(U. S. dollars) (Unaudited)
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 51,463 ($ 696,699)
Add (deduct) charges to operations not requiring
a current cash payment
Depreciation and amortization 146,152 151,877
Debt conversion expense 0 94,675
-------------- --------------
197,615 (450,147)
Changes in non-cash working capital balances related to operations:
Decrease (increase) in accounts receivable (311,229) 513,680
(Increase) decrease in income taxes recoverable 245 (15,211)
Decrease (increase) in inventories 10,451 11,807
Decrease (increase) in deferred contract costs
and unbilled revenue (60,935) 221,755
Decrease (increase) in other current assets 17,210 (19,144)
Decrease (increase) in other assets 0 13,099
Increase (decrease) in accounts payable and
accrued charges (23,788) (484,967)
Increase (decrease) in unearned revenue and
contract advances 13,418 (162,613)
Increase (decrease) in income taxes payable 0 (12,703)
-------------- --------------
(354,628) 65,703)
-------------- --------------
Net cash provided by (applied to) operating activities (157,013) (384,444)
-------------- --------------
Cash flows from investing activities:
Purchase of fixed assets (11,650) (35,598)
Deposit and prepaid costs 0 (118,391)
-------------- --------------
Net cash (applied to) provided by investing activities (11,650) (153,989)
--------------- --------------
Cash flows from financing activities
Proceeds from issuance of common stock 0 144,113
Cash held in trust 0 67,427
Deposit on common share offering 0 (109,355)
Shareholder loans 198,847 0
--------------- --------------
Net cash provided (used) by financing activities 198,847 102,185
--------------- --------------
Effect of exchange rate change on cash 3,843 (2,005)
--------------- --------------
Net cash (applied) provided during year 34,027 (438,253)
Cash - beginning of period 69,277 406,847
Cash acquired on reverse acquisition 0 174,786
--------------- --------------
Cash - end of period $103,304 $143,380
=============== ==============
</TABLE>
-5-
<PAGE>
TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1999
(Unaudited)
Note 1. Basis of Presentation
TurboSonic Technologies, Inc., formerly known as Sonic Environmental Systems,
Inc. and its subsidiaries (collectively the "Company"), directly and through
subsidiaries, designs and markets integrated pollution control and industrial
gas cooling/conditioning systems including liquid atomization technology, dust
suppression systems and ceramic heat exchanger systems to ameliorate or abate
industrial environmental problems. Sonic Environmental Systems, Inc. (Sonic) was
consolidated with Turbotak Technologies Inc. (Turbotak) on August 27, 1997
pursuant to a Plan of Reorganization that was approved by the Federal Bankruptcy
Court on July 3, 1997 (see Note 3).
The merger was treated for accounting purposes as a purchase by Turbotak of
Sonic in a reverse acquisition. Consequently, the accompanying consolidated
financial statements include the accounts of Turbotak and its majority-owned
subsidiaries. The accounts of Sonic were included with Turbotak's accounts
effective September 1, 1997 and incorporated all adjustments related to the Plan
of Reorganization.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulations S-X. Accordingly, these financial statements do not include all of
the information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending June 30, 1999. These consolidated financial statements should be read in
conjunction with the financial statements and footnotes thereto included in the
Company's annual report on form 10-KSB for the year ended June 30, 1998.
-6-
<PAGE>
Note 2. Costs and Estimated Earnings on Uncompleted Contracts
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
--------------- -------------
<S> <C> <C>
Costs incurred on uncompleted contracts 1,105,770 2,246,434
Estimated earnings 474,520 723,150
--------------- -------------
1,580,290 2,969,584
Less: billings to date 1,643,761 3,080,572
--------------- -------------
Included in accompanying balance sheets
under the following captions: (63,471) (110,988)
=============== ==============
Costs and estimated earnings in excess of
billings on uncompleted contracts 113,699 52,764
Billings in excess of costs and estimated
earnings on uncompleted contracts (177,170) (163,752)
--------------- --------------
(63,471) (110,988)
=============== ==============
</TABLE>
Note 3. Other Events
On July 17, 1996, certain of Sonic's creditors instituted an involuntary
liquidation proceeding against Sonic under Chapter 7 of the Federal Bankruptcy
Code. On September 16, 1996, the Court converted this involuntary proceeding
into a voluntary Chapter 11 reorganization proceeding. Contemporaneously
therewith, Sonic entered into an agreement with Turbotak, a privately held
Canadian company engaged in the design, manufacture, and servicing of air
pollution control equipment, which, among other matters, provided for Turbotak's
acquisition of an approximately $940,000 secured and unsecured bank claim
against Sonic and its advance of $205,000 to Sonic for working capital. Such
agreement further provided that Sonic would propose a Chapter 11 Plan of
Reorganization which, among other matters, would provide for a merger of Sonic
and Turbotak and the acquisition by Turbotak's shareholders of a controlling
equity interest in the merged company, TurboSonic Technologies, Inc.
The Plan of Reorganization was confirmed by the Court on July 3, 1997 following
requisite creditor approval. The Plan provided for the extinguishment of all
outstanding shares of the Company's common stock, as well as all outstanding
warrants and options to purchase the Company's common stock. The Plan further
provided that the Company consolidate with Turbotak (the "Consolidation") to
form a company to be called TurboSonic Technologies, Inc. which would have
10,000,000 shares of common stock outstanding, of which 8,200,000 shares or 82%
would be owned by Turbotak's present shareholders, and 1,255,700 shares or
approximately 12.6% would be issued to Sonic's present shareholders on a pro-
rata basis. The balance of 10,000,000 shares
-7-
<PAGE>
would be issued to Sonic's creditors and others as described in the Plan of
Reorganization. Consummation of the Consolidation, which also extinguished
Turbotak's claims against Sonic, took place on August 27, 1997.
Note 4. Loans from Shareholders
An officer and director of the Company, together with another shareholder of the
Company, lent an aggregate of Canadian $200,000 (representing $129,400 at the
exchange rate of $0.647 at such date) to the Company on October 21, 1998.
Another officer and director and another shareholder each lent Canadian $100,000
(representing $65,490 and $66,620 at the exchange rates of $0.6549 and $0.6662
at the date of their respective loans) to the Company on January 4, 1999 and
April 9, 1999, respectively. All of these loans are repayable two years from the
date of the loan, bear interest at 10% per annum and are collateralized by a
lien upon and security interest in substantially all of the Company's assets. As
an inducement to advance these sums to the Company, the lenders were granted
detachable warrants to purchase an aggregate of 400,000 common shares of the
Company at an initial exercise price of $0.50 through October 31, 2000,
increasing to $0.75 thereafter through October 31, 2002 and to $1.00 thereafter
through October 31, 2003, respectively. The warrants, whose initial exercise
price was greater than the market price of the Company's common shares on the
date such warrants were granted, expire on the earlier of October 31, 2003 or 30
days after the Company's shares have closed at a price per share above $1.50 for
10 consecutive trading days on the NASDAQ over-the-counter Bulletin Board. In
accordance with APB 14, a portion of the proceeds of the debt securities issued
with detachable stock purchase warrants, which is allocated as the fair-value of
the warrants, has been accounted for as paid-in capital. The related discount on
the debt securities will be amortized over the remaining period to maturity.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Three Months ended March 31, 1999 Compared with Three Months ended March 31,
1998
Original equipment revenue increased by $457,357 (363.6%) to $583,146 for the
three month period ended March 31, 1999 from $125,789 for the same period in
1998. The increase in revenues for the three month period ended March 31, 1999
was primarily due to the supply of two scrubbers and a cooling tower upgrade to
a major chemical processing firm. The new EPA "cluster rules", adopted in early
1998 by the U.S. government, have generated an increase in requests for
quotations for the Company's equipment and are now beginning to result in an
increase in orders.
Rehabilitation, maintenance and spare parts revenue increased by $117,405
(34.3%) to $459,287 for the three month period ended March 31, 1999 from
$341,882 for the same period in 1998. This increase reflects a return to a more
normal volume of this segment for this particular period of the year.
Cost of original equipment increased by $210,397 (180.0%) to $327,298 for the
three month period ended March 31, 1999 from $116,901 for the same period in
1998. As a percentage of original equipment revenue, cost of original equipment
was 56.1% for the three month period ended March 31, 1999 and 92.9% for the same
period in 1998. The increased costs of original equipment in this quarter is the
direct result of the increased sales volumes discussed above. The decrease
percentage in costs for original equipment in the March 1999 quarter reflects a
return to historical gross margins.
-8-
<PAGE>
Cost of rehabilitation, maintenance and spare parts increased by $73,792 (34.9%)
to $285,363 for the period ended March 31, 1999 from $211,571 for the same 1998
period. The increased costs are primarily the result of the increased volume
reported above. As a percentage of rehabilitation, maintenance and spare parts
revenue, the costs were 62.1% for the three month period ended March 31, 1999
and 61.9% for the same period in 1998.
Selling, general and administrative expenses decreased $71,950 (16.2%) to
$373,064 for the three month period ended March 31, 1999 from the same period in
1998. As a percentage of total revenue, selling, general and administrative
expenses were 35.8% for the quarter ended March 31, 1999 and 95.2% for the same
period in 1998. This reduction was the result of increased engineering
absorption in the current quarter, together with lower operating costs for the
New Jersey operation.
Amortization of goodwill which was created as the result of the merger with
Sonic Environmental amounted to $39,378 in the current quarter.
Interest expense of $4,528 was recorded for the three months ended March 31,
1999 from interest expense of $190 for the same period in 1998, an increase of
$4,338. The increase is the result of interest on shareholder loans in this
period compared to the same period a year earlier.
Results of Operations
Nine Months ended March 31, 1999
Compared with Nine Months ended March 31, 1998
Original equipment revenue increased by $133,303 (9.6%) to $1,515,427 for the
nine month period ended March 31, 1999 from $1,382,124 for the same period in
fiscal 1998. The increase in revenues for the nine month period ended March 31,
1999 was primarily due to an increased need by our customer base for systems-
type projects in this period, over the previous period.
Rehabilitation, maintenance and spare parts revenue increased by $609,918
(66.5%) to $1,527,309 for the nine month period ended March 31, 1999 from
$917,391 for the same period in 1997/1998. This increase reflects a return to a
more normal volume of this segment of the Company's business.
Cost of original equipment decreased by $122,565 (12.0%) to $894,834 for the
nine month period ended March 31, 1999 from $1,017,399 for the same period in
1997/1998. As a percentage of original equipment revenue, cost of original
equipment was 59.0% for the nine month period ended March 31, 1999 and 73.6% for
the same period in fiscal 1998. The decreased percentage in costs for original
equipment reflects a return to historical gross margins.
Cost of rehabilitation, maintenance and spare parts increased by $439,510
(83.0%) to $968,991 for the period ended March 31, 1999 from $529,481 for the
same fiscal 1998 period. The increased costs are primarily the result of the
increased volume reported above. As a percentage of rehabilitation, maintenance
and spare parts revenue, the costs were 63.4% for the nine month period ended
March 31, 1999 and 55.7% for the same period in 1997/1998. The increased
percentage reflects a return to historical gross margins.
Selling, general and administrative expenses decreased $245,944 (20.3%) to
$967,262 for the nine month period ended March 31, 1999 from the same period in
fiscal 1998. As a percentage of total revenue, selling, general and
administrative expenses were 31.8% for the three quarters ended March 31, 1999
and 52.8% for the same
-9-
<PAGE>
period in 1998. This reduction was the result of increased engineering
absorption over the previous year, together with the non-recurrence of a charge
against income in fiscal 1997 for Debt Conversion Inducement expense.
Amortization of goodwill which was created as the result of the merger with
Sonic Environmental amounted to $117,465 in the nine month period.
Interest expense of $14,034 was recorded for the nine months ended March 31,
1999 from interest income of $12,479 for the same period in fiscal 1998, an
increase in interest expense of $26,513. The increase in interest expense is the
result of interest on shareholder loans in this period compared to the same
period in fiscal 1998.
Liquidity and Capital Resources
The Company had a negative cash flow from operating activities of $157,013 for
the nine month period ended March 31, 1999 as compared to negative cash flow of
$384,444 for the same period in fiscal 1998, an improvement in cash flow of
$227,431.
At March 31, 1999, the Company had working capital of $213,259 as compared to
negative working capital as at June 30, 1998 of $138,435, an increase in working
capital of $351,694. The Company's current ratio (current assets divided by
current liabilities) was 1.20 and 0.87 as at March 31, 1999 and June 30, 1998,
respectively.
The Company's contracts typically provide for progress payments based upon the
achievement of performance milestones or the passage of time. The Company's
contracts often provide for the Company's customers to retain a portion of the
contract price until the achievement of performance guarantees has been
demonstrated. The Company attempts to have its progress billings exceed its
costs and estimated earnings on uncompleted contracts; however, it is possible,
at any point in time, that costs and estimated earnings can exceed progress
billings on uncompleted contracts, which would negatively impact cash flow and
working capital. At March 31, 1999 and June 30, 1998, "Unearned revenue and
contract advances" exceeded "Deferred costs and unbilled revenue" by $63,471 and
$110,988 respectively, thereby negatively effecting working capital.
As a result of the loss from operations incurred in the year ended June 30,
1998, the Company depleted its cash resources and had a working capital
deficiency as at June 30, 1998 of $138,435. As a consequence of such deficiency,
Donald R. Spink, Sr. and Patrick J. Forde, officers and directors of the
Company, together with two shareholders of the Company, lent an aggregate of
Canadian $400,000 (representing $261,510 at the exchange rate at the date of
each loan) to the Company (see Note 4 - Loans from Shareholders). These lenders
have indicated their intention to provide financial support to the Company, if
required, to meet working capital needs during the next year.
The Company's backlog as at March 31, 1999 was approximately $450,000, 95% of
which the Company believes will be shipped prior to the end of the current
fiscal year. The Company believes that the projected cash generated from
operations and the proceeds from the above mentioned financing will be
sufficient to meet its cash needs through the end of the fiscal year ended June
30, 1999.
-10-
<PAGE>
Year 2000
- ---------
The Company has performed a review of its Year 2000 preparedness relative to its
products and systems, its accounting software and its computer hardware. The
Company believes that it will not incur material costs in connection with
becoming Year 2000 compliant. In addition, the Company has received
communications from its significant third party vendors and service providers
stating that they are generally on target to become Year 2000 compliant in 1999
if they have not already done so. There can be no assurance that these third
party vendors and service providers will complete their own Year 2000 compliant
projects in a timely manner and that failure to do so would not have an adverse
impact on the Company's business.
Quantitative and Qualitative Information About Market Risk
- ----------------------------------------------------------
The Company does not engage in trading market risk sensitive instruments and
does not purchase hedging instruments or "other than trading" instruments that
are likely to expose the Company to market risk, whether interest rate, foreign
currency exchange, commodity price or equity price risk. The Company has
purchased no options and entered into no swaps. The Company has no bank
borrowing facility which could subject it to the risk of interest rate
fluctuations.
-11-
<PAGE>
Part II - Other Information
Item 1. None
Item 2. None
Item 3. None
Item 4. None
Item 5. None
Item 6. (a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K;
None
-12-
<PAGE>
Signature
---------
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 hereunto duly authorized.
DATED: May 11, 1999
TURBOSONIC TECHNOLOGIES, INC.
by: /s/ PATRICK FORDE
------------------
Patrick Forde, Treasurer and
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> MAR-31-1999
<CASH> 103,304
<SECURITIES> 0
<RECEIVABLES> 859,412
<ALLOWANCES> 57,046
<INVENTORY> 126,937
<CURRENT-ASSETS> 1,269,272
<PP&E> 90,484
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,691,824
<CURRENT-LIABILITIES> 1,008,980
<BONDS> 0
0
0
<COMMON> 3,693,261
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,691,824
<SALES> 1,042,433
<TOTAL-REVENUES> 1,042,433
<CGS> 612,661
<TOTAL-COSTS> 1,034,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,528
<INCOME-PRETAX> 3,207
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,207
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,207
<EPS-PRIMARY> $.000
<EPS-DILUTED> $.000
</TABLE>
