UNITED STATES
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 September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number 0-26998
ALCOHOL SENSORS INTERNATIONAL, LTD.
(Exact name of small business issuer as specified in its charter)
New York 11-310 4480
----------- -------------
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
11 Oval Drive, Islandia, New York 11722
----------------------------------------
(Address of principal executive offices)
516-342-1515
------------
(Issuer's telephone number)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
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 report (s),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $.001 par value 8,772,846 shares outstanding as of
November 7, 1996.
Transitional Small Business Disclosure Format: Yes __ No X
<PAGE>
INDEX
ALCOHOL SENSORS INTERNATIONAL, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed balance sheets - December 31, 1995 and September 30,
1996 (Unaudited).
Condensed statements of operations - Three months and nine
months ended September 30, 1996 and 1995 (Unaudited).
Condensed statements of cash flows - Nine months ended September
30, 1996 and 1995 (Unaudited).
Notes to condensed financial statement - September 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. OTHER INFORMATION
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT 11
(B) EXHIBIT 27
2
<PAGE>
PART I. ITEM 1
ALCOHOL SENSORS INTERNATIONAL, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
------------ --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $524,231 $244,306
Certificate of deposit (Note C)................ -- 500,000
Marketable securities (Note C)................. 1,980,383 --
Accounts receivable............................ -- 104,607
Inventory (Note D)............................. 142,890 515,174
Prepaid expenses............................... 189,699 118,243
---------- ----------
Total current assets........................ 2,837,203 1,482,330
Fixed assets-net..................................... 367,664 370,487
Restricted cash (Note E)............................. 1,017,317 --
Other assets ........................................ 23,084 23,084
------------ -----------
TOTAL................................... $4,245,268 $1,875,901
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $428,436 $622,104
Deposits....................................... 49,036 34,114
Due to officers/stockholders................... 132,782 132,782
Notes payable (Note C)......................... 17,317 500,000
Accrued litigation settlement cost (Note E).... 990,000 --
---------- ----------
Total current liabilities................... 1,617,571 1,289,000
--------- ---------
STOCKHOLDERS' EQUITY
Common stock $.001 par value, 25,000,000 shares authorized,
8,116,870 and 8,576,196 issued and outstanding
at December 31, 1995 and September 30, 1996.... 8,117 8,576
Additional paid-in capital........................... 9,398,354 10,626,883
Accumulated deficit.................................. (6,778,857) (10,048,558)
Unrealized gain on marketable securities............. 83 --
-------------- -------------------
Total stockholders' equity.................. 2,627,697 586,901
---------------- ------------
TOTAL................................... $4,245,268 $1,875,901
=============== =============
</TABLE>
The attached notes are made a part hereof.
3
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ending Ending
September 30, September 30,
----------------------- -------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales........................... $7,230 $19,372 $7,230 $126,706
Cost of goods sold (Note D)......... 5,423 6,911 5,423 663,339
-------- -------- -------- ----------
Gross profit (Loss)................. 1,807 12,461 1,807 (536,633)
Costs and expenses:
Research and development........ 359,393 192,366 755,664 375,809
Selling, general
and administrative...... 337,864 734,139 572,889 2,009,279
Litigation settlement (Note E)...... -- -- 382,683
---------- ---------- ---------- -----------
Loss from operations................ (695,450) (914,044) (1,326,746) (3,304,404)
Interest and other income........... -- 24,458 -- 73,436
Interest expense................... (32,007) (17,015) (52,990) (38,733)
------------ -------------- ------------ ------------
Net (Loss).......................... $(727,457) $(906,601) $(1,379,736) $(3,269,701)
========== ========== ============ ============
Net (loss) per common share......... $(.13) $(.11) $(.23) $(.39)
============== ============ ============ ============
Weighted average number of
shares outstanding 5,636,000 8,545,757 5,993,000 8,349,093
========= ========= ============ =============
</TABLE>
The attached notes are made a part hereof.
4
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................... $(1,379,736) $(3,269,701)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization............... 3,257 45,000
Amortization debt discount.................. 18,060 --
Common stock issued for services ........... 330,800 --
Changes in operating assets and liabilities:
(Increase) in accounts receivable........... -- (104,607)
(Increase) in inventory..................... (208,383) (372,284)
(Increase) decrease in prepaid expenses and
other current assets........................ (8,674) 71,456
Decrease in restricted cash................. -- 1,017,317
Increase (decrease) in deposit.............. 49,916 (14,922)
Increase in accounts payable and accrued
expenses................................ 295,542 193,668
Security Deposits........................... (19,891) --
Other Assets................................ (193,491) --
Other....................................... 3,287 --
----------- ------------
Net cash (used in) operating activities......... (1,109,313) (2,434,073)
----------- ------------
Cash flows from investing activities:
Sales of marketable securities.............. -- 1,980,300
Acquisition of fixed assets................. (116,406) (47,823)
---------- ------------
Net cash provided by (used in) financing
activities.................................. (116,406) 1,932,477
---------- ---------
Cash flows from financing activities:
Proceeds from sale of common stock.......... 247,401 238,988
Proceeds from notes payable, convertible notes
and warrants....................... 1,000,000 482,683
--------- -------
Net cash provided by financing activities....... 1,247,401 721,671
--------- -------
NET INCREASE IN CASH AND CASH
EQUIVALENTS.......................................... 21,682 220,075
Cash and cash equivalents -- Beginning of period..... 6,266 524,231
----- ----------
Cash and cash equivalents -- End of period........... $27,948 $744,306
======= ========
Supplemental disclosure of cash flow information:
Interest paid during the period................. $28,970
Common Stock issued for litigation settlement ....... 990,000
</TABLE>
The attached notes are made a part hereof.
5
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE A) -- BASIS OF PRESENTATION AND THE COMPANY
(1) Basis of presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-QSB and
Article 3 of Regulations S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principals
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included. Operating results for the nine month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. During 1996, the
Company is no longer in the development stage.
The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by generally accepted accounting principals for complete
financial statements. For further information, refer to the audited financial
statements and footnotes thereto included in the annual report on Form 10-KSB.
(2) The Company
Alcohol Sensors International, Ltd., ("the Company") was incorporated on
February 14, 1992, for the development and commercial exploitation of a Breath
Alcohol Ignition Interlock Device ("BAIID").
(NOTE B) -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Net loss per share of common stock
Net loss per share of common stock is based on the weighted average
number of shares outstanding during each period, and for the nine months ended
September 30 1995, excludes 1,000,000 shares contributed to the Company in
conjunction with the initial public offering. Common stock, options, and
warrants issued within twelve months of the Company's initial public offering
are considered outstanding through June 30, 1995, using the treasury stock
method.
(2) Inventory
Inventory consisting of electronic components, is stated at the lower
cost (first in - first out basis) or market. Inventory is comprised of
finished goods, work in progress, and components.
(3) Warranty Reserves
The Company has provided an estimate for warranty reserves.
(NOTE C:) -- NOTES PAYABLE
The Company has a line of credit of $500,000, bearing interest at the
prime rate, and is secured by a certificate of deposit. The amount outstanding
at September 30, 1996 was $500,000.
(NOTE D:) -- INVENTORY WRITE DOWN
Included in cost of goods sold for the nine months ended September
30, 1996, is an inventory write down of $556,026, related to problems the
Company experienced with the contract manufacturer of its operational
prototypes of Sens-O-Lock units. The Company has accelerated its research and
development efforts and as a result has introduced its initial new Sens-O-Lock
units containing Alcohol Specific Technology (AST) at the Motor Show in
Birmingham, England and in November 1996 in the Specialty Equipment Market
Association (SEMA) Show in Las Vegas.
6
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(NOTE E:) -- PENDING AND SETTLED LITIGATION
The Company and certain of its officers were named as defendants in an
action commenced in the Supreme Court Suffolk County which was removed to the
United States District Court for the Eastern District of New York, seeking money
damages of $2,500,000 and various forms of provisional relief. In August 1996,
the Company has settled the above law suit and in connection thereto has
provided $382,683 as an accrued cost to the settlement. In addition, the
$1,000,000 previously held in escrow has been released. Certain members of
management will donate their private shares to the Company to be used for the
purpose of funding the settlement and to offset the costs incurred by the
Company.
The Company and certain of its officers were named as defendants in an
action commenced in the United States District Court for the Eastern District
of New York in March 1996 by a stockholder seeking $2 million in alleged
damages as a result of the Company's handling of the above action. Management
believes that settlement of the above action renders the claims of this action
moot and intends to vigorously defend the action, including a demand for
sanctions. Accordingly, the accompanying financial statements make no
provision for such legal action.
The Company was named as a defendant in an action commenced in the
United States District Court for the Eastern District of New York in July
1996. The plaintiff is seeking $9 million plus 100,000 shares of Company
stock, alleging he performed certain work for the Company as an independent
contractor and was never compensated for the services he performed. The
company's position is that the plaintiff in this action failed to provide the
services as contracted and was not entitled to receive any payment. Defendant
has submitted it answer and management believes the claims alleged in this
lawsuit are frivolous and intends to defend the action vigorously.
The Company and certain of its officers were named as defendants in an
action commenced in the Supreme Court of the United States of New York, Orange
County, by two individuals claiming an equity interest in the Company, as well
as damages of $18.5 million, based upon a purported agreement with another
company, Alcohol Sensors, Inc., with which the claimants, certain officers of
the Company and others were affiliated in 1989, and a claim that one of the
individuals is the inventor of the technology that the Company is using. The
Alcohol Sensors, Inc. company (the company the plaintiff alleges he had an
interest in) ceased active operations in or about 1990 and was subsequently
dissolved in 1993 by a proclamation of the New York Secretary of State. The
action has been moved to the United States District Court for the Southern
District of New York. Defendant has submitted its answer and management
believes the claims alleged are frivolous and intends to defend the action
vigorously, including a demand for sanctions.
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
GENERAL
Since the Company's founding in February, 1992, it has engaged primarily
in the research, development and design of an innovative, technologically
advanced ignition interlock system to detect various intoxication levels of
automobile drivers. The Company has been in a development stage prior to 1996,
devoting substantially all of its resources to research and development
including potential new applications of its technology beyond ignition
interlock.
RECENT DEVELOPMENTS
In connection with problems encountered with the contract manufacturer
of its initial Sens-O-Lock units, the Company wrote off certain inventory,
aggregating $556,026. The Company presently has an inventory of approximately
$515,000, after all writedowns. The Company is now placing its efforts and
resources toward the manufacturing of its new Alcohol Specific Technology Sens-
O-Lock (AST); representing the Company's future. The Company will be utilizing
certain of these component parts from pre-existing inventory in its new AST
units.
7
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
In October 1996, the Company launched its first AST Sens-O-Lock at
the World Car Show in Birmingham, England (the world's largest automotive
show). Additionally, Mr. Michael Ghazarian, Managing Director of Digital
Vehicle Security Systems, Inc. (UK) and Scarico Manufacturing of Europe have
executed a Consulting Agreement with the Company to design and produce the
retooling necessary to produce the new Sens-O-Lock (AST) technology. Mr.
Ghazarian became a member of the Board of Directors of the Company on
September 24, 1996.
The Company has developed and manufactured a new Headlight Management
System technology, (DRL) WeatherEye. Many states require headlights to be on
during adverse weather conditions. The WeatherEye provides four value added
facilities for the end user: headlights on at 50% when ignition is on; all
lights full on when wipers are on; automatic all lights full on at dusk; and
automatic all lights off when ignition is terminated. The Company believes
that the product can be price competitive and offer substantially more value
and facility than existing Daytime Running Light systems that presently exist.
Additionally, aside from certain state requirements, several insurance
companies are providing insurance discounts of 3% to 5% for DRL equipped
vehicles.
In September 1996 the Company, together with Michael Ghazarian, the
Managing Director of Digital Vehicle Security Systems, Ltd. (Digital) formed a
new company, ASE, Plc. ASE, Plc. which is 80% owned by the Company and 20% owned
by Michael Ghazarian, will serve as a joint venture between ASI and Digital. In
May 1996, Digital entered into a Distribution Agreement with the Company to
purchase up to 1.6 million interlock devices over a 60 month period to be
distributed in the European market. Digital has assigned the rights to
distribute the product in Europe to ASE. Under the new Joint Venture Agreement,
ASI will be able to retain a greater share of the profit to be derived from
its European sales. ASI will now have a manufacturer with a vested ownership and
will now be able to buy the product at cost.
With the formation of ASE, the Company is seeking to raise $2.5 million
dollars in additional capital utilizing a Regulation 506 offering (See Part II,
Item 2) to fund the costs of the manufacture of the WeatherEye, and to build new
AST technology Sens-O-Lock units. Due to the significant number of warrants
outstanding from the prior equity offerings and the need for additional capital,
the Board decided to reduce the exercise price of the outstanding warrants from
a $1.50 to $1.00 for a two week period (October 16 - November 1). During that
period, 191,650 warrants were exercised, yielding $191,650 to the Company. These
funds are being used currently for working capital.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996, and September 30, 1995
The Company had sales of $19,372 for the three months ending September 30,
1996 compared to sales of $7,230 for the three months ending September 30, 1995.
Cost of sales was $6,911 and $5,423 respectively.
The Company's loss from operations for the three months ended September
30, 1996 was $914,044, as compared to $695,450 for the three months ended
September 30, 1995, an increase $218,594 principally due to selling, general
and administrative. Expenditures on research and development decreased to
$192,366 for the current period, compared to $359,393 for the prior period,
and a decrease of $167,027 reflecting the Company's virtual completion of AST
technology and WeatherEye. Selling, general and administrative expenses
increased to $734,139 for the period compared to $337,864 for the prior
period, an increase of $396,275, reflecting the fact that the Company has
started operating in its new facilities at a significantly higher overhead. In
addition, the Company has hired a staff which includes ancillary payroll costs
which it did not have in the prior year. In 1996, the Company also started to
expend funds for marketing and selling its products.
During the three months ended September 30, 1996 the Company recognized
$24,458 of interest and other income as a result of its marketable security
portfolio transactions as compared with none in the three months ended
September 30, 1995. Interest expense for the three months ending September 30,
1996 was $17,015 as compared with $32,007 for the prior period.
As a result of the above, the Company had a net loss of $906,601 for the
three months ending September 30, 1996 or $(.11) per share as compared to
$727,457 or $(.13) per share for the prior period.
Nine Months Ended September 30, 1996, and September 30, 1995
The Company had net sales of $126,706 for the nine months ending
September 30, 1996 and $7,230 for the nine months ending September 30, 1995.
Costs for goods sold was $663,339, which included an inventory write down of
$556,026 in 1996 and $5,423 in 1995. See "Recent Developments" above.
8
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Company's loss from operations for the nine months ended September
30, 1996 was $3,304,404, as compared to $1,326,746 for the nine months ended
September 30, 1995, an increase of $1,977,658 principally due to an increase
in selling, general and aministrative expenses. Expenditures on research and
development decreased to $375,809 for the period, compared to $755,664 for the
prior period, and a decrease of $379,855 reflecting the Company's efforts in
their AST technology and the completion of its WeatherEye. Selling, general
and administrative expenses increased to $2,009,279 for the period compared to
$572,889 for the prior period, an increase of $863,501, reflecting the fact
that the Company has left the development stage and has started operating in
its new facilities at a significantly higher level of rent and overhead.
During the nine months ended September 30, 1996 the Company recognized
$73,436 of interest and other income as a result of its marketable security
portfolio transactions as compared with none in the nine months ended
September 30, 1995. Interest expense was $38,733 for the nine months ending
September 30, 1996 as compared with $52,990 for the nine months ending
September 30, 1995.
As a result of the above, the Company had a net loss of $3,269,701 for
the nine months ending September 30, 1996 or $(.39) per share as compared to
$1,379,736 or $(.23) per share for the prior period.
LIQUIDITY AND CAPITAL RESOURCES
From inception through September 30, 1995, the Company financed its
operations primarily from private placements of equity and debt securities
totaling approximately $2,500,000. On November 9, 1995, the Company
successfully completed its initial public offering selling 1,000,000 units,
each comprised of two shares of common stock, one redeemable Class "A" common
stock purchase warrant exercisable after November 9, 1996 at $3.75 per share
and 1/2 redeemable Class "B" common stock purchase warrant exercisable after
November 9, 1996 at $10.00 per share. On December 19, 1995, the Underwriter's
overallotment option of 150,000 units was exercised in full. The Company's net
proceeds were approximately $5,800,000. As a result of the Company's loss of
$3,269,701 for the nine months ended September 30, 1996, the manufacturing
problems encountered in the production of the initial Sens-O-Lock units, delays
in meeting initial sales targets and the development of the new AST technology
and WeatherEye have resulted in the need for additional capital not contemplated
in the Company's Initial Public Offering. The Company will need
to seek additional financing through its pending 506 offering of securities
for $2,500,000. The proceeds will be utilized to build its inventory to
desired levels and expand its present levels in developing the new generation
Sens-O-Lock and its determination, development and marketing for WeatherEye was
not included in the initial public offering and has led the Company to utilize
more capital than it had originally anticipated. In fiscal year 1996, the
Company received $430,639 to date from the exercise of outstanding warrants.
The Company has obtained a $500,000 line of credit with Chemical Bank in
February 1996 at the prime rate, of which $500,000 was drawn down in March and
April 1996 to pay for furnishings, fixtures, and equipment at its new
facility. The Company has a certificate of deposit of $500,000 as collateral for
the line of credit. The Company has completed its renovation of office space,
furnishings, and equipment, as well as established a networked management,
inventory control, and customer and fulfillment information systems.
Much of the Company's efforts subsequent to the initial public offering
has been placed in the setting up of Company systems and personnel to assist
the Company in fulfilling its business plan and to capitalize on the
opportunities available to it in the automobile ignition interlock system and
related technologies. The Company has expended additional funds on research
and development for its existing product line and to develop new
opportunities.
During the period between the end of the third quarter and the
Company's first significant sales management has taken some measures necessary
to preserve its limited cash resources. Management has laid off approximately
half of its work force and management has deferred half of their salary until
desired levels of sales are achieved.
9
<PAGE>
ALCOHOL SENSORS INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS(CONTINUED)
(UNAUDITED)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Footnote E to Financial Statement
ITEM 2. CHANGES IN SECURITIES
The Company is authorized to issue up to 3,000,000 shares of Preferred
Stock. The Preferred Stock shall be issuable in registered form only without
dividend coupons. The Preferred Stock will have the dividend rights, conversion
rights, and rights upon liquidation and redemption. The designations of the
Preferred Stock shall be as follows: "Series A Cumulative Convertible Redeemable
Preferred Stock," "Series B Cumulative Convertible Redeemable Preferred Stock"
and "Series C Cumulative Convertible Redeemable Preferred Stock."
The Regulation 506 Offering unit consists of 2,778 shares of each of
Series A, Series B, and Series C Cumulative Convertible Redeemable Preferred
Stock. The price per unit is $25,000 with a minimum amount of 20 units and a
maximum amount of 100 units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. OTHER INFORMATION
NONE
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 11
Exhibit 27
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ALCOHOL SENSORS INTERNATIONAL, LTD.
(Registrant)
- ----------------------, 1996 By: /s/
-----------------------------------
Michael A. Sylvester
Treasurer, Chief Financial Officer
11
EXHIBIT 11
ALCOHOL SENSORS INTERNATIONAL, LTD.
COMPUTATION OF LOSS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ------------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net (loss) ............................. $ (727,457) $ (906,601) $(1,379,736) $(3,269,701)
=========== =========== ============ ============
Shares:
Weighted average number of common
shares outstanding................... 6,636,000 8,545,757 6,626,000 8,319,093
Add common stock equivalents issued
within twelve months of an initial
public offering (determined by the
"treasury stock" method)(1).......... -- -- 367,000 --
Shares contributed in connection
with the initial public offering..... (1,000,000) -- (1,000,000) --
------------ ------------ ----------- ------------
TOTAL........................ 5,636,000 8,545,757 5,993,000 8,319,093
============ ============ =========== ============
(Loss) per common share $(.13) $(.11) $(.23) $(.39)
============ ============ =========== ============
</TABLE>
- ------------------
(1) In accordance with Securities and Exchange Commission requirements,
common shares, options and warrants issued during the twelve-month
period prior to the filing of the initial public offering have been
included in the calculation as if they were outstanding for all periods
through June 30, 1995 applying the treasury stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet (unaudited) and the operations for the nine months ended September 30,
1996 (unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 744,306
<SECURITIES> 0
<RECEIVABLES> 104,607
<ALLOWANCES> 0
<INVENTORY> 515,174
<CURRENT-ASSETS> 1,482,330
<PP&E> 425,261
<DEPRECIATION> 54,774
<TOTAL-ASSETS> 1,875,901
<CURRENT-LIABILITIES> 1,289,000
<BONDS> 500,000
0
0
<COMMON> 8,576
<OTHER-SE> 578,325
<TOTAL-LIABILITY-AND-EQUITY> 1,875,901
<SALES> 126,706
<TOTAL-REVENUES> 126,706
<CGS> 663,633
<TOTAL-COSTS> 663,633
<OTHER-EXPENSES> 2,787,771
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,733
<INCOME-PRETAX> (3,269,701)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,269,701)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,269,701)
<EPS-PRIMARY> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
