<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
------------------
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
---------- ----------
Commission File Number 1-12532
RENAISSANCE GOLF PRODUCTS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 86-0664849
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12187 S. BUSINESS PARK DRIVE, SUITE 100, DRAPER, UTAH 84020
(Address of Principal Executive Offices)
(801) 501-0200
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
As of March 31, 1999, the registrant had 9,151,072 shares outstanding of
its Common Stock, $.001 par value.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of March 31, 1999 and 1
December 31, 1998
Statements of Operations for the Three Months ended 2
March 31, 1999 and March 31, 1998
Statements of Cash Flows for the Three Months ended 3
March 31, 1999 and March 31, 1998
Notes to Financial Statements for the Three Months ended 4
March 31, 1999 and March 31, 1998
Item 2. Management's Discussion and 5
Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Exhibits and Reports on Form 8-K 9
SIGNATURES 11
</TABLE>
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<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE GOLF PRODUCTS, INC.
BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
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<CAPTION>
March 31, December 31,
1999 1998
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $250,974 $63,184
Accounts receivable, net $395,308 411,311
Inventories, net $2,056,171 2,273,601
Deposits made on inventory $485,399 497,838
Prepaid expenses 196,847 15,900
------------ ------------
Total current assets 3,384,699 3,261,834
PROPERTY AND EQUIPMENT, net 446,745 465,413
INTANGIBLE ASSETS, net 773,333 780,000
OTHER ASSETS 15,401 0
------------ ------------
Total assets $4,620,178 $4,507,247
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Revolving line of credit, net of discount $4,936,766 $4,936,766
Accounts payable $514,635 772,848
Accrued liabilities $179,384 692,453
Accrued royalties $118,355 243,355
Current portion of notes payable 881,946 855,000
------------ ------------
Total current liabilities 6,631,086 7,500,422
------------ ------------
Notes Payable, less current portion 3,373 20,000
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value, 150,000
shares authorized; 50,250 and 250 issued
and outstanding as of 3-31-99 and 12-31-98,
respectively 503 3
Common stock, $.001 par value, 40,000,000
shares authorized; 9,151,072 and 7,498,153
issued and outstanding as of 3-31-99 and
12-31-98, respectively 9,151 7,498
Additional paid-in capital 19,453,914 17,870,841
Accumulated deficit (21,477,849) (20,891,517)
------------ ------------
Total stockholders' equity (deficit) (2,014,281) (3,013,175)
------------ ------------
Total liabilities and stockholders'
equity (deficit) $4,620,178 $4,507,247
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF OPERATIONS
AS OF MARCH 31, 1999 AND MARCH 31, 1998
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<CAPTION>
1999 1998
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<S> <C> <C>
NET SALES $984,473 $671,873
COST OF SALES 750,906 462,279
------------ ------------
Gross profit 233,567 209,594
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 635,646 566,408
------------ ------------
Operating loss (402,079) (356,814)
OTHER INCOME (EXPENSE):
Interest Income 1,748 3,372
Interest Expense (162,789) (146,496)
Other (23,231) 58
------------ ------------
Net other expense (184,272) (143,066)
------------ ------------
LOSS BEFORE INCOME TAX EXPENSE (586,351) (499,880)
PROVISION FOR INCOME TAXES 0 (800)
------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (586,351) (500,680)
EXTRAORDINARY ITEMS 0 0
------------ ------------
NET LOSS ($586,351) ($500,680)
------------ ------------
------------ ------------
EARNINGS PER SHARE-BASIC:
Loss before extraordinary item ($0.08) ($0.08)
Extraordinary gain-forgiveness of debt 0.00 0.00
------------ ------------
Net loss per common and common
equivalent share ($0.08) ($0.08)
------------ ------------
------------ ------------
WEIGHTED AVERAGE OUTSTANDING COMMON
AND COMMON EQUIVALENT SHARES-BASIC 7,524,537 5,976,351
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
AS OF MARCH 31, 1999 AND MARCH 31, 1998
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<CAPTION>
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($586,351) ($500,680)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 32,603 7,560
Accretion of discount 0 4,215
Change in allowance for doubtful accounts 0 (92,610)
Change in reserve for inventory obsolescence (75,000)
Non-cash reduction in accounts payable 0 0
Compensation expense recorded in connection
with options 0 1,350
Net change in operating assets and liabilities:
(Increase) Decrease in accounts receivable 16,003 296,432
(Increase) Decrease in inventories 292,430 (2,102,848)
(Increase) Decrease in prepaid expenses (161,083) (68,151)
Less payment with equity 170,740
(Increase) Decrease in other assets (15,401) (20,372)
Increase (Decrease) in accounts payable &
accrued expenses (893,931) (75,010)
Less Conversion of payables to equity 414,484
------------ ------------
Net cash used in operating activities (805,506) (2,550,114)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property & equipment (7,268) 0
------------ ------------
Net cash used in investing activities (7,268) 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Conversion of note payable to equity 0 (150,000)
Conversion of payable to equity 0 0
Payments on notes payable, net of discount (18,040) 0
Proceeds from notes payable 28,381 875,000
Proceeds from issuance of preferred stock 1,000,000 0
Proceeds from issuance of common stock 0 1,210,000
------------ ------------
Net cash provided by financing
activities 1,010,341 1,935,000
------------ ------------
NET INCREASE (DECREASE) IN CASH 197,567 (615,114)
CASH and cash equivalents, beginning of period 63,184 775,854
------------ ------------
CASH and cash equivalents, end of period $260,751 $160,740
------------ ------------
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</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
Notes To Financial Statements
For The Three Months Ended March 31, 1999 And March 31, 1998
1. BASIS OF PRESENTATION
In the opinion of management, the unaudited financial statements reflect
all normally recurring adjustments necessary to fairly present the Company's
financial position and results of operations for the periods indicated.
The accompanying interim financial statements should be read in
conjunction with the financial statements and related notes included in the
Company's 10-KSB for the period ended December 31, 1998, which has been filed
with the Securities and Exchange Commissions. Certain information and
footnote disclosures normally included in the Company's annual financial
statements have been omitted from the quarterly financial statements based
upon Securities and Exchange Commissions rules and regulations.
Because the Company's business is highly seasonal, the results of
operations for the first quarter of the year may not necessarily reflect
operating results for the full fiscal year.
Net loss per common and common equivalent share was computed based on
the net loss divided by the weighted average number of common and common
equivalent shares outstanding, unless antidilutive, during the year presented.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards 128, Earnings per Share ("SFAS 128"), which is
effective for financial statements issued for periods ending after December
15, 1997. The effect on the Company of adopting SFAS 128 has not yet been
determined.
2. FINANCING
During 1997 and 1998, the Company entered into a series of Loan and
Credit Agreements with the AKA Charitable Remainder Unitrust #1 ("AKA"). The
first line of credit was for a maximum amount of up to $1,000,000, and the
second line of credit provides for the Company to draw the maximum aggregate
principal amount of the lesser of $5,000,000, or 80% of the Company's current
assets. The Company was not in compliance with conditions of the Loan and
Credit Agreement on December 31, 1998 by having drawn on the credit line
beyond 80% of the Company's current assets and having not made interest
payments for approximately five months. To remedy any potential defaults
under the loan with AKA, the Company entered into an agreement with AKA on
January 11, 1999 to issue shares of its Common Stock in lieu of any cash
payment of interest due or to become due on or before June 30, 1999.
During March 1999, the Company issued to AKA 50,000 shares of
Convertible Preferred Stock for $1,000,000. The Shares are convertible at any
time into shares of Common Stock at the rate of 20 shares of Common Stock for
one share of Preferred Stock. In the event the Company fails to comply with
the repayment terms of the loan agreements with AKA, the conversion rate
increases from 20 to one, to 200 to one. The Preferred Stock pays dividends
at the rate of 5% during 1999 (payable in shares of Common Stock), and 6%
thereafter (payable in shares of Common Stock or cash at AKA's election).
In addition to the credit lines secured by the Company during the past
several years, a private placement of the Company's shares of Common Stock
was undertaken on March 2, 1998. The Company sold a total of approximately
556,000 units, raising $1,668,000. Each unit consisted of one share of its
Common Stock, par value $.001 per share, and a warrant to purchase one share
of Common Stock. The purchase price was $3.00 per unit. The Warrants are
immediately exercisable and transferable separately from the shares of Common
Stock. Each Warrant entitles its holder to purchase one share of Common Stock
at an exercise price of $5.00 per share, subject to adjustment in certain
events. The Warrants may be exercised at any time and from time to time until
<PAGE>
December 31, 2002. The Company has the right to redeem the Warrants at $0.01
per Warrant upon not less than 30 days' notice if the Closing Price of the
Common Stock for a period of 20 consecutive trading days, ending not earlier
than 10 days prior to the date of such redemption notice, equals or exceeds
$7.00 per share, subject to adjustment in certain events.
During November 1998, the Company's Class "A" Warrants issued in
conjunction with the Company's initial public offering expired.
3. YEAR 2000 MATTERS
The inability of computers, software, and other equipment utilizing
microprocessors to recognize and properly process date fields containing a
two digit year reference such as "00" for the year 2000 is commonly referred
to as the Year 2000 issue. Any of the Company's computer programs that
utilize two digit years may recognize "00" as the year 1900 rather than the
year 2000. Such recognition problems could cause disruptions of operations,
including the inability to process transactions, send invoices, or engage in
similar essential business activities.
The Company has identified all significant applications that will
require modification to address the Year 2000 issue. Internal and external
resources are being used to make the required modifications and test Company
systems for the year 2000. The modifications process of all significant
applications is substantially complete, and the Company intends to complete
modifications this summer and continue to conduct testing through the end of
1999.
The Company is also communicating with third party vendors to determine
their compliance with the Year 2000 issue. The Company can provide no
assurance that the systems of third parties will be in compliance by the turn
of the century. The inability of the Company to complete modifications and
the failure of third party vendors to complete compliance with the Year 2000
issue, or both, could have a material adverse effect on the Company's ability
to perform essential business tasks which could have a material adverse
effect on the Company's business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All statements, other than statements of historical fact, included in
this Form 10-QSB, including without limitation the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are, or may be deemed to be, "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve assumptions, known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of The Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements contained in this Form 10-QSB. Such potential risks and
uncertainties include, without limitation, competitive pricing and other
pressures from other golf equipment manufacturers, economic conditions
generally and in the Company's primary markets, consumer spending patterns,
perceived quality and value of the Company's products, availability of
capital, cost of labor (foreign and domestic), cost of raw materials,
occupancy costs and other risk factors detailed herein and in other of the
Company's filings with the Securities and Exchange Commission. The
forward-looking statements are made as of the date of this Form 10-QSB and
the Company assumes no obligation to update the statements or to update the
reasons actual results could differ from those projected in such statements.
Readers are cautioned not to place undue reliance on these statements.
RESULTS OF OPERATIONS
The Company's successful efforts to raise funding for working capital
needs and move to supply the mass merchandise retail market during 1998
resulted in sales increases over 1997. The Company's operations during 1998
and the first quarter of 1999 required additional access to working capital.
During the first quarter of 1999, the Company raised $1,000,000 through the
sale of 50,000 shares of Class "A" Preferred Stock to AKA. The
<PAGE>
capital infusion allowed the Company to bring its license commitment to Fila
current and pay suppliers providing product for the Company's mass
merchandise line.
Net sales for the three months ended March 31, 1999, were $984,000
compared to $672,000 for the comparable period in 1998, an increase of
$312,000 or 46%. The increased sales volume was attributable to the
contribution of revenues from the newly acquired subsidiaries in the amount
of $355,000. The Company continues to implement re-focused business
strategies and marketing efforts to place greater emphasis on market niches
which have been the most consistently productive since the Company's
inception and which are the most closely aligned with Fila Sport's interests
and marketing emphasis: high-fashion design and value. The Company's business
is seasonal in nature. Therefore, operating results for one or more quarters
may not be indicative of future trends or operating results for the full
fiscal year.
Cost of sales increased from $462,000 for the three months ended March
31, 1998, to $751,000 for the comparable period in 1999, an increase of
$289,000 or 62%. The gross profit margin decreased from 31% for the three
months ended March 31, 1998 to 23% for the comparable period in 1999. This
decrease in gross margins resulted from price/volume mix and a tighter golf
products market due to competitive factors including excess inventories among
competitors.
Selling, general, and administrative costs were $635,000 for the three
months ended March 31, 1999 compared to $566,000 for the comparable period in
1998, an increase of $69,000 or 12%.
The Company's interest expense increased from $146,000 for the three
months ended March 31, 1998 to $163,000 for the comparable period in 1999 as
a result of interest on the AKA loans.
The Company experienced a net loss before extraordinary item and net
loss per share before extraordinary item of $586,000 and $0.08, respectively,
for the three months ended March 31, 1999 compared to a net loss before
extraordinary item and net loss per share before extraordinary item of
$501,000 and $0.08, respectively, for the comparable period in 1998.
The Company's inventory decreased from $2,274,000 at December 31, 1998
to $2,056,000 at March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The golf industry and sporting goods industry in general suffered during
1998 due to several factors including adverse whether conditions and the
Asian economic crisis. These conditions resulted in overproduction which led
to inventory accumulation. The Company suffered along with the entire golf
industry during 1998. As a result of conditions during 1998, the golf
industry currently has excess inventory to sell during 1999 which the Company
believes has effected and will continue to effect Company sales during 1999.
During 1998 and throughout the Company's operating history, net
losses have caused significant cash flow problems. Currently cash and
equivalents stand at $250,974, and the Company need to raise additional
capital to fund continuing operations.
Based upon the operating history, the Company's auditors during the past
several years have expressed concern about the Company's ability to continue
operations. The Company believes these concerns are primarily founded upon
the Company's lack of working capital resulting from the Company operating at
a loss which causes the Company to rely upon outside capital to fund ongoing
operations. During 1998, the Company took action to cut operating expenses by
reducing its work force and bringing certain independent contractor functions
in house. The Company also intends to pursue a new marketing plan to increase
sales during 1999. The Company believes these changes will help move existing
inventory and reduce its cash flow concerns, but it is unlikely that these
changes alone will provide sufficient capital to fund ongoing operations.
<PAGE>
During the first quarter of 1999, the Company was not in compliance with
conditions of the Loan and Credit Agreement on December 31, 1998 by having
drawn on the credit line beyond 80% of the Company's current assets and
having not made interest payments for approximately five months. To remedy
any potential defaults under the loan with AKA, the Company entered into an
agreement with AKA on January 11, 1999 to issue shares of its Common Stock in
lieu of any cash payment of interest due or to become due on or before June
30, 1999.
In March 1999, the Company issued to AKA 50,000 shares of Convertible
Preferred Stock for $1,000,000. The Shares are convertible at any time into
shares of Common Stock at the rate of 20 shares of Common Stock for one share
of Preferred Stock. In the event the Company fails to comply with the
repayment terms of the loan agreements with AKA, the conversion rate
increases from 20 to one, to 200 to one. The Preferred Stock pays dividends
at the rate of 5% during 1999 (payable in shares of Common Stock), and 6%
thereafter (payable in shares of Common Stock or cash at AKA's election).
Regarding the Company's current cash position cash used in operating
activities for the three months ended March 31, 1999 and March 31, 1998 was
$(805,000) and $(2,550,000), respectively. Working capital at March 31, 1999
was $(3,246,000) compared to $(4,239,000) at December 31, 1998. Cash and cash
equivalents at March 31, 1999 were $251,000 compared to $63,000 at December
31, 1998. Inventories, net of reserves at March 31, 1999 were $2,056,000
compared to $2,274,000 at December 31, 1998, an decrease of $217,000. Also,
accounts receivable decreased $16,000 from $411,000 at December 31, 1998 to
$395,000 at March 31, 1999. The revolving line of credit of $4,937,000, net
of discounts, on December 31, 1998 remained the same as March 31, 1999. Notes
payable for $882,000 were outstanding at March 31, 1999 compared to $855,000
at December 31, 1998. Accounts payable and accrued liabilities decreased by
$894,000 from December 31, 1998 to March 31, 1999. Royalties due and payable
pursuant to the license agreement with Fila Sport for the first quarter of
1999 were paid prior to the end of the quarter.
Historically the Company has funded itself through operations, the sale
of stock, and borrowing. Most recently the Company has raised equity through
a private offering of its stock and through negotiation loan agreements as
are outlined throughout this report. The Company plans to continue to use
these methods to fund operations. Potential investors are being approached to
lend to or invest in the Company. The Company will need to substantially
reduce operations if it is unable to raise outside capital within the next
few months to help fund operations.
The golf business is seasonal because of the winter condition throughout
much of the World, especially the Northern United States. This seasonality
causes the Company's sales to vary by quarter; accordingly, operating results
can vary substantially from quarter to quarter and one quarters results may
not be representative of the Company's annual results.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is currently maintaining a legal action in the Utah
Third District Court on January 6, 1999 entitled RENAISSANCE GOLF PRODUCTS,
INC. VS. BRAD OLIVER, case number 990900097, for Breach of Contract, Quantum
Meruit, Fraud and Intentional Interference with Prospective Economic
Advantage. The essence of the case is Brad Oliver receiving inventory valued
at approximately $131,951.04 for resale and not making payment for the goods
received. Settlement discussions are ongoing and the Company intends to
obtain a settlement for the full amount of the goods received by Mr. Oliver.
The prospects for obtaining a judgement against Mr. Oliver for the full
amount of the claim are good. The prospects for collecting any awarded
damages from Mr. Oliver are unknown due to Mr. Oliver's personal financial
circumstances.
ITEM 2. CHANGES IN SECURITIES
<PAGE>
On March 10, 1999, the Company issued to AKA 50,000 shares of Series "A"
Convertible Preferred Stock for $1,000,000 in cash. The sale to AKA
constituted a sale to an existing accredited investor in an isolated
transaction exempt from registration. The Shares are convertible at any time
into shares of Common Stock at the rate of 20 shares of Common Stock for one
share of Preferred Stock. In the event the Company fails to comply with the
repayment terms of the loan agreements with AKA, the conversion rate
increases from 20 to one, to 200 to one. The Preferred Stock pays dividends
at the rate of 5% during 1999 (payable in shares of Common Stock), and 6%
thereafter (payable in shares of Common Stock or cash at AKA's election).
The proceeds received were used to pay $275,000 due to Fila Sport
pursuant to the License Agreement, and to pay manufacturers and suppliers for
product ordered by Target, the Company's primary mass retail client, and
other suppliers for outstanding balances due.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the first quarter of 1999, the Company entered into material
contracts as outlined in and attached to the Company's Form 10-KSB previously
filed with the Commission.
<PAGE>
SIGNATURES
Pursuant to 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.
RENAISSANCE GOLF PRODUCTS, INC.
Date: May 14, 1999 By:
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John B. Hewlett
Chairman of the Board
Date: May 14, 1999 By:
------------ ----------------------------------
Wade Mitchell
Principal Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET OF RENAISSANCE GOLF PRODUCTS, INC. AND SUBSIDIARY AS OF MARCH 31,
1999 AND THE CONSOLIDATED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 250,794
<SECURITIES> 0
<RECEIVABLES> 395,308<F1>
<ALLOWANCES> 0
<INVENTORY> 2,541,570<F2>
<CURRENT-ASSETS> 3,384,699
<PP&E> 446,745<F3>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,620,178
<CURRENT-LIABILITIES> 6,631,086
<BONDS> 0
0
503
<COMMON> 9,151
<OTHER-SE> (2,023,935)
<TOTAL-LIABILITY-AND-EQUITY> 4,620,178
<SALES> 984,473
<TOTAL-REVENUES> 984,473
<CGS> 750,906
<TOTAL-COSTS> 635,646
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 162,789
<INCOME-PRETAX> (586,351)
<INCOME-TAX> 0
<INCOME-CONTINUING> (586,351)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (586,351)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
<FN>
<F1>NET OF ALLOWANCES
<F2>INCLUDES $485,399 DEPOSITS MADE ON INVENTORY
<F3>NET OF ACCUMULATED DEPRECIATION
</FN>
</TABLE>
