<PAGE> 1
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 QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..... to .....
Commission file number 0-25406
TECHNICAL CHEMICALS AND PRODUCTS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0308922
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
3341 S.W. 15TH STREET, POMPANO BEACH, FLORIDA 33069
(Address of principal executive officer) (Zip code)
Issuer's telephone number, including area code: (954) 979-0400
--------------
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 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
--- ---
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
<TABLE>
CLASS OUTSTANDING AS OF APRIL 30, 1996
----- --------------------------------
<S> <C>
Common Stock $.001 par value 9,717,880
Preferred Stock $.001 par value 0
Transitional Small Business Disclosure Format (check one):
</TABLE>
YES NO X
--- ---
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND
SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---- ----
ASSETS (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 374,774 $ 666,486
Accounts receivable, net of allowance
for doubtful accounts of $18,165 at
March 31, 1996 and December 31, 1995 1,206,325 939,263
Investments available for sale 483,670 1,110,932
Inventory 995,618 548,555
Prepaid expenses and deposits 267,075 207,996
---------- -----------
Total current assets 3,327,462 3,473,232
Property & equipment, net of accumulated
amortization of $205,244 and $123,046 2,118,467 1,925,789
Patents and Trademarks, net of accumulated
amortization $384,400 and $120,244 14,535,273 14,878,507
Goodwill, net of accumulated amortization
of $23,766 and $6,221 2,171,929 2,195,695
Other assets 373,988 136,521
---------- -----------
Total assets $22,527,119 $22,609,744
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,843,519 $ 1,002,582
Accrued expenses 258,527 185,420
Notes payable 5,125,000 5,188,888
Notes payable to related parties 79,366 75,336
---------- -----------
Total current liabilities 7,306,412 6,452,226
---------- -----------
Other (13,779) 3,971
Stockholders' equity:
Common stock, $.001 par value, 25,000,000
shares authorized; 8,117,880 shares issued
and outstanding at March 31, 1996 and
December 31, 1995 8,118 8,118
Additional paid-in capital 17,583,104 17,583,104
(Accumulated deficit) (2,356,736) (1,437,675)
------------ -----------
Total shareholders' equity 15,234,486 16,153,547
----------- -----------
Total liabilities & shareholders' equity $22,527,119 $22,609,744
=========== ===========
NOTE: The Balance Sheet at 12/31/95 has been derived
from the audited financial statements at that date.
</TABLE>
See accompanying notes
2
<PAGE> 3
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND
SUBSIDIARY CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months
Ended March 31
--------------
1996 1995
--------------------
(unaudited) (unaudited)
<S> <C> <C>
Revenue:
Sales $1,831,307 $ 736,531
Returns and allowances (66,261) (151,346)
---------- ----------
Net sales 1,765,046 585,185
Cost of sales 963,039 255,371
---------- ---------
Gross profit 802,007 329,814
Operating expenses:
Selling, general and administrative 796,474 212,834
Research & Development 839,455 78,000
---------- ----------
Income (loss) from operations (833,922) 38,980
Other Income (expense):
Interest income 45,201 39,710
Interest expense (130,340) (7,927)
Income (loss) before income taxes
and extraordinary item (919,061) 70,763
Income tax benefit (provision) 330,862 (26,890)
---------- ----------
Income before extraordinary item (588,199) 43,873
---------- ----------
Extraordinary loss on early extinguishment
of debt (net of income tax benefit of $23,161) 0 (37,789)
---------- ----------
Net income $ (588,199) $ 6,084
========== ==========
Income (loss) before extraordinary loss per share (.07) .01
---------- ----------
Extraordinary (loss) per share -- (.01)
========== ==========
Net income (loss) per share (.07) .00
Weighted average number of common shares outstanding 8,117,880 (1) 6,225,995 (1)
========== ==========
</TABLE>
(1) See accompanying notes
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<PAGE> 4
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
1996 1995
-------------------
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $ (588,199) $ 6,084
Adjustments to reconcile net (loss) income
to net cash used by operating activities:
Depreciation and amortization 363,899 4,022
Changes in operating assets and liabilities:
Accounts receivable (267,062) (240,319)
Inventory (447,063) (31,300)
Accounts payable 840,937 (280,874)
Accrued expenses 73,107 (1,356)
Prepaid expenses (59,079) 0
Credit for income taxes (330,862) 3,729
----------- -----------
Net cash used by operating activities (414,322) (540,014)
INVESTING ACTIVITIES:
Purchase of property & equipment (189,577) (16,565)
Increase in other assets (237,467) 106,448
Sale (purchase) of marketable securities 627,262 (2,095,396)
----------- -----------
Net cash provided (used) by investing activities 200,218 (2,005,513)
FINANCING ACTIVITIES:
Other (17,750) 0
Net proceeds from issuance of common stock 0 3,834,126
Payment on notes payable (63,888) 0
Payments on notes payable to shareholders 0 (265,000)
Notes Payable to related parties 4,030 0
Shareholder distributions 0 (267,958)
----------- -----------
Net cash (used) provided by financing activities (77,608) 3,301,168
----------- -----------
Net (decreases) increase in cash (291,712) 755,641
Cash and cash equivalents at beginning of period 666,486 219,179
----------- -----------
Cash and cash equivalents at end of period $ 374,774 $ 974,820
=========== ===========
</TABLE>
See accompanying notes
4
<PAGE> 5
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO MARCH 31, 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements (the
"Financial Statements") of Technical Chemicals and Products, Inc. and
Subsidiary (the "Company") are unaudited, and in the opinion of management,
include all normal and recurring adjustments which are necessary for a fair
presentation. Accordingly, the Financial Statements should be read in
conjunction with more complete disclosures contained in the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995. The results of operations for
interim periods are not necessarily indicative of the results of operations for
the entire year.
RECLASSIFICATIONS
Certain amounts in the prior year's condensed consolidated financial
statements have been reclassified to conform to the current period's
presentation.
SHARES OUTSTANDING
The weighted average number of common shares outstanding reflects the
Company's 2 for 1 stock split on July 31, 1995.
INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, "Accounting
for Income Taxes." Deferred income tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
INVENTORIES
Inventories, consisting of raw materials and finished goods, are
valued at the lower of cost (computed on the first-in, first-out method) or
market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.
The cost of maintenance and repairs are charged to operations as incurred.
Significant renewals and betterment's are capitalized and depreciated over
their estimated useful lives.
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SUBSEQUENT EVENTS
On April 30, 1996, the Company sold an aggregate of 1,585,000 shares of
Common Stock and received net proceeds of approximately $21,927,000 pursuant to
a public offering ("Public Offering") in which Deutsche Morgan Grenfell/C. J.
Lawrence Inc. acted as representative of the underwriting syndicate.
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This Quarterly Report on Form 10-QSB, including the information
incorporated by reference herein, includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Act of 1934, as amended, and is subject to
the safe-harbor created by such sections. The Company's actual results may
differ significantly from the results discussed in such forward-looking
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company is principally engaged in the design, development,
manufacture and marketing of a wide range of medical diagnostic products for
use in physician offices, at home and at other point-of-care locations. The
Company's medical diagnostic products employ its patented and proprietary
membrane-based technology. The Company distributes its proprietary brand named
products and has private label arrangements with drug, discount and supermarket
chains in North America. The Company intends to expand direct distribution of
its diagnostic products with the launching of its HealthCheck(R) line of
products. In addition to its diagnostic products business, the Company,
through its recently acquired Pharmetrix Division, is involved in the research,
development and commercialization of transdermal and mucosal drug delivery
systems and skin permeation enhancers. The Company is also a manufacturer of
high purity specialty biochemicals. The Company currently owns 16 U.S. patents
and 28 foreign patents, and has seven pending U.S. patent applications and 38
pending foreign patent applications.
In order to support anticipated growth and new product development,
the Company expects to incur significantly increased operating expenses and
capital expenditures in the future and, as such, the Company believes that its
results of operations in prior periods may not be indicative of results in
future periods. The Company expects to incur significant expenses in 1996
primarily as a result of: (i) the increased research and development associated
with its non-invasive transdermal glucose monitoring system (the "TD Glucose
System") and various transdermal and mucosal drug delivery products and skin
permeation enhancers; (ii) the expansion of direct distribution of medical
diagnostic products; (iii) the introduction of the Company's cholesterol
monitoring system which can be used by physicians, laboratories and patients
at home (the "One Step CholestoCheck System"); and (iv) the hiring of
additional personnel and other costs associated with expansion of the Company's
manufacturing facilities. Additionally, the Company anticipates significant
expenditures in 1996 as a result of the purchase of production equipment.
For a complete description of the Company's products and business, see
Part 1, Item 1 of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1995.
RESULTS OF OPERATIONS
The Pharmetrix Division was acquired in November 1995 and began
producing revenues in January 1996. Accordingly, the results of operations for
the first quarter of 1995 do not reflect the operations of the Pharmetrix
Division and impact the comparison of the three months ended March 1996 and
1995.
Comparisons of the Three Months ended March 1996 and 1995.
Net sales for the first quarter of 1996 increased 201.6% to $1,765,046
from $585,185 during the comparable period in 1995. The increase resulted
principally from increased sales of private label pregnancy-related diagnostic
products in the United States, increased foreign sales of diagnostic products
and development fees paid by Taiho Pharmaceutical Co., Ltd in
7
<PAGE> 8
connection with the development of a urinary incontinence transdermal drug
delivery product by the Company's Pharmetrix Division.
Gross profit as a percentage of net sales decreased to 45.4% in the
first quarter of 1996 compared to 56.4% in the first quarter of 1995 due to
changes in product mix and the introduction of packaging operations for the
HealthCheck(R) line of products.
The increase in selling, general and administrative expenses was
attributable to the acquisition of the Pharmetrix Division, the hiring of
additional laboratory, administrative and manufacturing personnel to support
the higher level of current sales and the build-up for future sales.
The increase in research and development expense was primarily the
result of costs related to the operation of the Company's Pharmetrix Division.
The increase in interest expense was primarily the result of the
issuance of a promissory note in the principal amount of $2,000,000 (the
"Note") and a convertible promissory note in the principal amount of $3,000,000
(the "Convertible Note") to Flora, Inc. ("Flora") in connection with the
acquisition of the Company's Pharmetrix Division.
The Company's net income decreased primarily as a result of costs
associated with the integration of the Pharmetrix Division, selling, general
and administrative expenses incurred in connection with the Company's expansion
of its facilities, research and development expenses related to the Pharmetrix
Division, and certain non-recurring legal and accounting expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $374,774 on March 31,
1996, a decrease of $291,712 from $666,486 on December 31, 1995. The decrease
in cash for operating
8
<PAGE> 9
activities was primarily the result of the expansion activities described
above. On April 30, 1996, the Company sold an aggregate of 1,585,000 shares of
Common Stock and received net proceeds of approximately $21,927,000 pursuant to
a Public Offering in which Deutsche Morgan Grenfell/C. J. Lawrence Inc. acted
as representative of the underwriting syndicate. As a result of the completion
of the Public Offering, cash and cash equivalents increased to $22,670,093 as
of April 30, 1996.
Upon completion of the Public Offering, the Company repaid the Note
and delivered a prepayment notice with respect to the entire principal amount of
$3,000,000 due under the Convertible Note, the terms of which give Flora 180
days to accept prepayment or convert the Convertible Note into shares of the
Company's Common Stock. The Company intends to use the remaining net proceeds
from the Public Offering to repay the Convertible Note, purchase production
equipment, develop and manufacture the TD Glucose System, engage in research
and development relating to transdermal drug delivery, conduct clinical trials
and for working capital and other general corporate purposes.
The Company believes that its existing cash balances, plus the net
proceeds from its Public Offering, as described above, will be sufficient to
fund the Company's cash requirements. This estimate is based on certain
assumptions, including assumptions concerning reasonable growth and revenues,
and there can be no assurance that such assumptions will prove to be accurate
or that unbudgeted costs will not be incurred. The Company's future working
capital and capital expenditure requirements may vary materially from those now
planned depending on numerous factors, including additional manufacturing
scale-up for the Company's current and future products, possible future
acquisitions, the focus and direction of the Company's research and development
programs, competitive and technological advances, future relationships with
corporate partners, the FDA regulatory process and the Company's marketing and
distribution strategy. If the Company's growth exceeds its plans, additional
working capital will be needed.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
In January 1996, the Company's Board of Directors recommended for
approval the adoption of amended and restated Articles of Incorporation (the
"Articles of Incorporation") and approved the adoption of Amended and Restated
Bylaws (the "Bylaws") which include certain anti-takeover provisions that could
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the outstanding voting
stock of the Company. In February 1996, the then majority shareholder approved
the Articles of Incorporation, effective on March 14, 1996. These provisions
(the "Anti-Takeover Provisions") include a staggered Board of Directors,
certain super majority voting requirements with respect to removal of directors
and amendments to the Articles of Incorporation and Bylaws, requirements
concerning the filling of board vacancies, adoption of Florida's Control Share
Acquisition Act, elimination of shareholder action by written consent, increase
in the number of authorized shares of Common Stock from 25,000,000 to
100,000,000, creation of a class of "blank check" preferred stock and an
increase in the percentage of shareholder votes required to call a special
meeting of shareholders.
The Company's Board of Directors and the then majority shareholder
also approved the adoption of a Shareholder Protection Rights Agreement
pursuant to which preferred stock purchase rights will be distributed to
holders of Common Stock. These provisions and agreements are intended to
encourage a person interested in acquiring the Company to negotiate with, and
to obtain the approval of, the Board of Directors in connection with such a
transaction. However, certain of these provisions and agreements may
discourage a future acquisition of the Company, including an acquisition in
which shareholders might otherwise receive a premium for their shares. As a
result, shareholders who might desire to participate in such a transaction may
not have the opportunity to do so.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
See response to "Item 2 - Changes in Securities."
ITEM 5. OTHER INFORMATION.
On April 30, 1996, the Company sold an aggregate 1,585,000 shares
(after exercise of an over-allotment option) of Common Stock and received net
proceeds of approximately $21,927,000 pursuant to a Public Offering in which
Deutsche Morgan Grenfell/C.J. Lawrence, Inc. acted as representative of the
underwriting syndicate. For a description of the intended use
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of the proceeds of the Public Offering, see "Part 1 - Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations."
In April 1996, Stuart R. Streger, C.P.A. was appointed as a Vice
President and as Chief Financial Officer of the Company, and Robert G. Pitts,
J.D, Ph.D., was appointed Vice President, Business Development of the Company.
In May 1996, Elias Amador, M.D., Ph.D. and Kathryn Harrigan, MBA, Ph.D. became
members of the Board of Directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
2. * Asset Purchase Agreement among Pharma Patch Public Limited Company, PP Holdings, Inc.
and the Company
3.1 ** Articles of Incorporation of the Company, as amended
3.2 ** By-laws of the Company
3.3 ***** Amended and Restated Articles of Incorporation of the Company
3.4 ***** Amended and Restated Bylaws of the Company
4.1 ***** See Exhibits 3.3 and 3.4 for provisions of the Amended and Restated Articles of
Incorporation and the Amended and Restated Bylaws of the Company defining the rights
of holders of Common Stock of the Company
4.2 *** Form of Common Stock Certificate of the Company
10.1 ****** Employment Agreement between Jack L. Aronowitz and the Company dated December 31,
1992, as amended
10.2 ***** Amended and Restated 1992 Incentive Stock Option Plan
10.3 ***** Cancellation and Exclusive License Agreement between Jack Aronowitz and the Company
dated January 31, 1996
10.4 ***** Employment Agreement between John Pippert and the Company dated January 31, 1996
</TABLE>
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<TABLE>
<S> <C>
10.5 ***** Employment Agreement between Cleve Laird and the Company dated January 31, 1996
10.6 ** Lease--Pompano Beach, Florida
10.6.1 ***** Business Lease Extension--Pompano Beach, Florida
10.6.2 ***** Main Lease--Menlo Park, California; Sublease--Menlo Park
10.6.3 ***** Assignment and Assumption of Sublease and Landlord's Consent Thereto between Menlo
Business Park, Patrician Associates, Inc., Flora, Inc., Pharma Patch PLC and Technical
Chemicals and Products, Inc. dated November 15, 1995
10.7 ** Health-Mark Diagnostics, Inc. Shareholders Agreement dated March 7, 1994
10.8 **** Stock Option Agreement with Cleve Laird dated July 29, 1994
10.9 ** Letter Agreement with John Faro (for stock options) dated August 12, 1994
10.10 ****** Warrant Agreement between the Company and Jack L. Aronowitz
10.11 ***** Supplemental Agreement by and between Pharma Patch Public Limited Company and PP
Holdings, Inc. dated January 16, 1996
10.12 ***** Stock Option Agreement with John Pippert
10.13 ** Agreement between Company and Equity Communications dated January 6, 1995
10.14 ***** Letter Agreement between the Company and Redstone Securities, Inc. dated January 15,
1996
10.15 ***** Letter Agreement between the Company and Ira Weingarten dated January 15, 1996
10.16 ***** Letter Agreement with Flora, Inc. dated February 5, 1996
10.17 ****** Employment Agreement between the Company and Martin Gurkin dated January, 1996
10.18 ****** Stock Option Agreement with Martin Gurkin dated November, 1996
27 Financial Data Schedule (for SEC use only)
</TABLE>
12
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* Incorporated by reference to the exhibit of the same
number in the Company's Form 8-K filed on November 29,
1995.
** Incorporated by reference to exhibit of the same
number in Registration Statement on Form SB-2 filed on
October 28, 1994 (No. 33-85756).
*** Incorporated by reference to the exhibit of the same
number in the Company's Annual Report on Form 10-KSB
for the period ended December 31, 1995 filed on March
31, 1996.
**** Incorporated by reference to exhibit of the same
number in Amendment No. 1 to Registration Statement
on Form SB-2 filed on January 13, 1995 (No. 33-85756).
***** Incorporated by reference to exhibit of same
number filed in the Company's Registration
Statement on Form S-1 on February 12, 1996 (No.
333-1272)
****** Incorporated by reference to exhibit of the same
number filed in Amendment No. 2 to the Company's
Registration Statement on Form S-1 on March 20, 1996.
(b) Reports on Form 8-K
In connection with the acquisition of its Pharmetrix Division, the
Company filed a Form 8-K/A dated January 23, 1996 with respect to Item 7 of
Form 8-K. In connection therewith, the Company filed the following financial
statements for Pharma Patch Public Limited Company: (i) Consolidated Balance
Sheets as at February 28, 1995 and 1994 (audited) and as at August 31, 1995
(unaudited); (ii) Consolidated Statements of Loss and Deficit for the three
years ended February 28, 1995, 1994 and 1993 (audited) and the six-month
periods ended August 31, 1995 and 1994 (unaudited); and (iii) Consolidated
Statements of Cash Flows for the years ended February 28, 1995, 1994 and 1993
(audited) and the six-month periods ended August 31, 1995 and 1994. In
addition, the following unaudited pro forma financial statements were filed
for the Company: (i) Condensed Consolidated Balance Sheet at September 30,
1995; (ii) Condensed Consolidated Statement of Operations for the Nine Months
ended September 30, 1995; and Condensed Consolidated Statement of Operations
for the year ended December 31, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECHNICAL CHEMICALS AND PRODUCTS, INC.
DATE: MAY 14, 1996 /S/ JACK L. ARONOWITZ
-------------------------
JACK L. ARONOWITZ
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
/S/ STUART R. STREGER
-------------------------
STUART R. STREGER
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 374,774
<SECURITIES> 483,670
<RECEIVABLES> 1,224,490
<ALLOWANCES> (18,165)
<INVENTORY> 995,618
<CURRENT-ASSETS> 3,327,462
<PP&E> 2,423,642
<DEPRECIATION> 205,244
<TOTAL-ASSETS> 22,527,119
<CURRENT-LIABILITIES> 7,306,412
<BONDS> 0
0
0
<COMMON> 8,118
<OTHER-SE> 15,226,368
<TOTAL-LIABILITY-AND-EQUITY> 22,527,119
<SALES> 1,765,046
<TOTAL-REVENUES> 1,831,307
<CGS> 963,039
<TOTAL-COSTS> 963,039
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130,340
<INCOME-PRETAX> (919,061)
<INCOME-TAX> (330,862)
<INCOME-CONTINUING> (588,199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (588,199)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
