SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended Commission File
Number
September 30, 1996 33-87284-N4
THERMO-MIZER ENVIRONMENTAL CORP.
528 Oritan Avenue
Ridgefield, NJ 07657
Tel: 201-941-5805
Delaware
22-2312917
(State of Incorporation)
(I.R.S. Employer Identification No.)
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 preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [root]
No
At October 31, 1996, the latest practicable date, there were 2,181,500 shares of
Common Stock outstanding, $.001 par value.
<PAGE>
THERMO-MIZER ENVIRONMENTAL CORP.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements:
Condensed Balance Sheets
September 30, 1996 and June 30,1996 3
and Retained Earnings
for the three months ended
September 30, 1996 and 1995. 5
Condensed Statements of Cash Flows
for the three months ended
September 30, 1996 and 1995 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 11
PART II. OTHER INFORMATION 15
<PAGE>
THERMO-MIZER ENVIRONMENTAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
September 30,1996 June 30, 1996
(Unaudited)
Current Assets:
Cash $ 1,510,218 2,181,092
Other time deposits 375,000 375,000
Contracts receivable-net of allowance
of $15,000 771,314 790,451
Inventories 331,358 315,452
Unbilled receivables 147,277 254,838
Prepaid expenses and other 199,758 189,240
------- --------
Total Current Assets 3,334,925 4,106,073
Property and Equipment - net 164,336 100,404
Other Assets 145,866 45,867
------- ------
Total Assets $3,645,127 $4,252,344
========== ==========
THERMO-MIZER ENVIRONMENTAL CORP.
<PAGE>
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,1996 June 30,1996
(Unaudited)
Current Liabilities:
Note payable - bank $375,000 $375,000
Accounts payable - trade 283,051 260,092
Accrued expenses and other 237,699 68,714
------- ------
Total Current Liabilities 895,750 703,806
------- -------
Commitments and Contingencies
Stockholders' Equity
Common Stock, $.001 par value,
25,000,000 shares authorized;
1,921,500
1,921 1,896
and 1,896,500 shares
issued and
outstanding
Additional paid-in capital 3,268,126 3,243,151
Retained earnings (deficit) (520,670) 303,491
--------- -------
Total Stockholders' Equity 2,749,377 3,548,538
---------
Total Liabilities and Stockholders' $ 3,645,127 $4,252,344
=========== ==========
Equity
THERMO-MIZER ENVIRONMENTAL CORP.
<PAGE>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995.
(UNAUDITED)
1996 1995
---- ----
Contract and other revenues $488,610 $479,227
Cost of revenues 480,133 316,902
------- -------
Gross profit 8,477 162,325
----- -------
Expenses:
Personnel and related costs 138,578 60,909
Selling and administrative 197,010 53,574
expenses
Product development costs 74,236 26,350
------ ------
Total expenses 409,824 140,833
------- -------
Operating income (loss) (401,347) 21,492
Interest income (expense) 21,517 6,830
-----
Income (loss) from operations (379,830) 14,662
Nonoperating costs (444,331) ________
---------
Income (loss) before income taxes (824,161) 14,662
Income taxes - net ________ 525
------------
Net income (loss) (824,161) 14,137
Retained earnings - beginning 303,491 416,629
------- -------
Retained earnings - ending $(520,670) $430,766
========== ========
Earnings (loss) per share $(.43) $.01
====== ====
Weighted average number of common and
common equivalent shares 1,897,564 1,100,000
========= =========
outstanding
THERMO-MIZER ENVIRONMENTAL CORP.
<PAGE>
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
AND 1995.
(UNAUDITED)
1996 1995
--- ----
Cash flows from operating activities:
Net income (loss) $ (824,161) $ 14,137
Adjustments to reconcile net
earnings
to net cash provided by
operating
activities:
Write-off of 95,000
consulting agreement
Nonrecurring 104,375
charges
Depreciation and amortization 19,838 3,358
(Increase) Decrease in net
operating assets 78,394 (926)
------ -----
Net cash provided by (used in)
operating activities (526,554) 16,569
--------- -------
Cash flows (used in )investing activities:
Loan to APC (93,750)
Purchase of property and equipment (50,570) (13,131)
Total (144,320) (13,131)
-------- --------
Cash flows from (used in) financing activities:
Payments on debt (199,351)
Proceeds from debt 200,000
Deferred offering costs ______ (10,000)
--------
Net cash provided by (used in)
financing activities ______ (9,351)
-------
Net increase (decrease) in cash (670,874) (5,913)
Cash and cash equivalents - beginning 2,181,092 59,313
---------- ------
Cash and cash equivalents - ending 1,510,218 $53,400
========== =========
<PAGE>
SEE ACCOMPANYING NOTES ON CONDENSED
FINANCIAL STATEMENTS
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
NOTE 1--BASIS OF PRESENTATION
The accompanying condensed interim financial statements for the
three-month periods ended September 30, 1996 and 1995 are unaudited and include
all adjustments considered necessary by management for a fair presentation. The
results of operations realized during an interim period are not necessarily
indicative of results to be expected for a full fiscal year. These financial
statements should be read in conjunction with the information filed as part of
the Company's Annual Report on Form 10-KSB
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Company's principal accounting and financial reporting
policies is as follows:
Revenue Recognition
Contract revenues are recognized on the percentage-of-completion method by
multiplying total contract revenue by the estimated percentage of contract
completion. Changes in job performance, job conditions, and estimated
profitability, including those arising from contract penalty provisions and
final contract settlements, may result in revisions to costs and income and are
recognized in the period in which the revisions are determined.
Revenue recognized in excess of amounts billed to customers is included in the
Balance Sheet caption "Unbilled receivables" and is expected to be billed within
one year.
Inventories
Inventories consist principally of parts and components for use in contracts and
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out cost flow assumption.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using straight-line and accelerated methods based upon
the estimated useful lives of the related assets as follows:
Furniture and fixtures 5 years Vehicles 7 years Machinery and equipment 5-7
years Expenditures for repairs and maintenance are charged to expense as
incurred.
Statement of Cash Flows
For the purposes of this statement, investments and time deposits having an
initial term of 90 days or less are considered to be cash equivalents.
Product Development Cost
Product development costs are charged to operations as incurred. During the
three-month period ended September 30, 1996, such charges include the cost of
engineering labor and overhead amounting to $51,560. All charges during the
three-month period ended September 30, 1995 were paid to consultants and
contractors.
Earnings Per Share
Earnings per common and common equivalent share are calculated by dividing net
income by the weighted average number of common and common equivalent shares
outstanding during the period, after giving retroactive effect to the .75 to 1
reverse stock split effected in January 1996. The assumed exercise of
outstanding warrants would have been antidilutive and, therefore, were excluded
from the calculation.
Warranty Costs
The Company's policy is to warrant parts on new installations for one year from
start-up of the system. The cost of parts used in installations is generally not
a material component of the total installation costs. The Company's policy is to
expense related warranty costs, which have not been material, as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
<PAGE>
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results may differ from those estimates.
Revenue, Credit and Cash Concentration
A significant portion of the Company's revenue is derived from a small number of
systems contracts performed for customers located principally in the New York
Metropolitan Area. Accordingly, a substantial portion of the Company's accounts
receivable at September 30, 1996 is due from customers in the pharmaceutical or
commercial real estate industry operating in the New York Metropolitan area.
Substantially all of the Company's cash balances at September 30, 1996 are
maintained with one bank. Such balances exceed the amount covered by the Bank's
depository insurance for individual depositors.
Reclassification
Certain accounts from 1995 have been reclassified to conform with the 1996
presentation.
NOTE 3--SIGNIFICANT NONRECURRING TRANSACTIONS
Nonrecurring transactions consist of:
Solay agreement
$ 244,375
Write-off of Nationwide consulting agreement
95,000
Postemployment cost
40,000
Professional fees associated with transactions
67,510
Other
(2,554)
Total
$ 444,331
Solay, Inc. Consulting Agreement and Issuance of Nonqualified Options
On July 30, 1996, the Company entered into a one-year financial
consulting agreement with Solay, Inc. ("Solay") under which Solay agreed to
provide the Company with financial public relations and acquisition-related
services in consideration for a payment of $165,000 (of which $10,000 is
included in "Prepaid expenses" at September 30, 1996) and an option (the
"Option") granting Solay the right to purchase 550,000 units at an exercise
price of $1 per unit. Each unit consists of one share of common stock and two
Class B warrants. Each Class B warrant entitles the holder thereof to purchase
one share of common stock at an exercise price equal to the greater of (i) $3
per share or (ii) 120% of the offering price of a share of common stock in a
secondary public offering which results in gross proceeds of at least
$3,000,000. The Class B warrants are exercisable for a period of five years
commencing on the earlier of (i) one year from the date that the option was
granted or (ii) the consummation of an acquisition, as defined, by the Company.
The Company registered all securities covered by the Option in a Registration
Statement on Form S-8. The Class B Warrants are not listed on any exchange and
are, therefore, not readily transferable.
Solay may exercise options for up to 260,000 units upon September 30,
1996, the effective date of the Company's Registration Statement on Form S-8,
and for an additional 40,000 units within 90 days thereafter. The remainder of
the Option becomes exercisable at the earlier of (i) the consummation by the
Company of an acquisition, as defined, or (ii) 18 months from the date of grant.
The Option expires five years from the date of grant. Solay granted an
irrevocable proxy to vote all shares purchased by Solay pursuant to the Option
to the Company's President. Such proxy terminates at the time that the shares
are sold, exclusive of a transfer pursuant to a pledge of the shares. Solay
exercised options for 260,000 units in October 1996.
Nationwide Securities, Inc. ("Nationwide"), the underwriter for the
Company's initial public offering, agreed to terminate the underwriting
agreement effectively eliminating all restrictive covenants set forth therein
and severing the relationship between the Company and Nationwide. Accordingly,
the Company also wrote off the unamortized portion, amounting to $95,000, of the
Nationwide consulting agreement during the three-month period ended September
30, 1996.
The Company authorized the issuance of nonqualified options for 180,000
units to officers and directors. The units covered by these nonqualified options
are identical to the units included in the Option issued to Solay, except that
they are exercisable at estimated fair market value at the date of
<PAGE>
grant. All securities included in these nonqualified options were registered on
a Registration Statement on Form S-8 in October 1996.
For financial reporting purposes, the Company has ascribed a value of
$.05 to each Class B Warrant. The aggregate difference between the fair market
value of a share of common stock on the date of grant ($1.0623) and the value
ascribed to each share of common stock included in the units described above
($.90) for the Solay Options amounts to $89,375 and was accounted for as an
expense during the three-month period ended September 30, 1996.
The transactions above result in a modification of the exercise price
of the Redeemable Warrants issued as part of the Company's initial public
offering under the antidilution provisions of the warrant agreement. The
issuance of the options described above results in the exercise price of the
Redeemable Warrants being reduced from $6.00 to $4.01. In addition, each
Redeemable Warrant, as adjusted, will entitle the holder thereof to purchase 1.5
shares of Common Stock at the adjusted purchase price of $4.01 per share,
thereby increasing the number of shares reserved for issuance in connection with
the possible exercise of the Redeemable Warrants to 2,587,500 from 1,725,000.
Postemployment Benefits
The Company agreed to purchase an annuity for an officer who retired
during the three month period ended September 30, 1996, the cost of which
($40,000) was charged to operations.
Professional Fees
The Company satisfied certain professional fees by issuing 25,000
shares of Common Stock.
NOTE 4--OTHER SIGNIFICANT TRANSACTIONS
American Process Control, Inc. Agreement
In August 1996, the Company made a noninterest-bearing loan of $93,750
(which is included in the Balance Sheet caption "Prepaid and other") to American
Process Control, Inc. ("APC"), the proceeds from which will be used to fund the
development of a working temperature-activated steam trap alarm device (the
"Product"). The loan, which is collateralized by all of APC's assets, is due on
December 15, 1996 and may be extended by APC for a period of up to 90 days
provided that APC is making satisfactory progress on the development of a
working model of the Product. If APC successfully completes development of the
Product as of the final maturity date of the loan, the Company will receive 45%
of APC's common stock in full satisfaction of such loan and will also receive
the (i) exclusive right to sell the Product in the Heating, Ventilation and Air
Conditioning market and (ii) nonexclusive right to sell the product in all other
markets. APC will sell the Product to the Company at a price equivalent to 120%
of APC's manufacturing costs. If APC fails to complete a working copy of the
Product as of the final maturity date of the loan, the Company may seek recovery
of all amounts due thereunder.
Enersave Agreement
In July 1996, the Company and Enersave, Inc. ("Enersave") entered into
an agreement under which the Company acquired, for $100,000 (which is included
in the Balance Sheet caption "Other Assets"), all of Enersave's rights to
provide all necessary performance metering and billing services pursuant to
certain energy service contracts between Enersave and certain public utility
companies. The acquisition price will be amortized over the ten-year contract
performance period.
Stock Option Plan
In September 1996, the Board of Directors adopted, subject to approval
by the shareholders, a stock incentive plan under which the Company could issue
incentive stock options, nonqualified stock options and stock appreciation
rights. The maximum number of shares which may be issued under this plan is
500,000.
NOTE 5--INCOME TAXES
The Company has established reserves for the entire benefit associated
with the unused Federal income tax loss carryforwards because the Company must
realize income in the future to utilize such carryforwards.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995.
The Company cautions readers that important factors may affect the
Company's actual results and could cause such results to differ materially from
forward-looking statements made by or on behalf of the Company. Such factors
include, but are not limited to, changing market conditions, the impact of
competitive products, pricing, acceptance of the Company's products in
development and other risks detailed herein and in other filings that the
Company makes with the Securities and Exchange Commission.
General
The Company's operations are currently dominated by systems contracts
with customers in the pharmaceutical and chiller control industries.
Fluctuations in sales, revenues and operating results can and do occur because
of the timing of such contracts since certain larger contracts require greater
amounts of vendors' materials and use of subcontractors than do other contracts.
Generally, gross margins are lower on those contracts which require the purchase
of significant amounts of vendor materials and services compared with contracts
which are more engineering or labor intensive. In addition, the Company's
engineering staff is capable of serving a significant volume of business. Thus,
engineering costs do not fluctuate at the same rate as revenues. This means that
if revenues increase, gross profits will increase at a faster rate than revenue.
The reverse is true if revenues were to decrease below the breakeven point.
Because of the Company's historical emphasis on systems sales, a
substantial portion of its revenue is derived from a relatively few number of
contracts. In general, the Company has between 45 and 50 open contracts in a
fiscal quarter of which fewer than ten comprise more than 50 percent of revenues
for that quarter. This also means that a small number of customers make up a
large percentage of sales. For the three-month period ended September 30, 1996,
sales to four customers comprised 81% of total sales (with individual customers
comprising 39%, 19%, 13%, and 10%, respectively, of total revenues).
The Company is implementing a strategy to reduce its dependence on
large contracts by increasing its focus on product sales and service. Its
product development efforts have resulted in the recent introduction of two new
products, and several others are under development. No assurance can be given
that the Company will be successful in these efforts. However, if these efforts
are successful, certain historical relationships between costs and revenues may
not be indicative of such relationships in the future.
Results of Operations
Comparison of the Three Months Ended September 30, 1996 and 1995
The Company completed an initial public offering of its common stock
and warrants in March 1996. Thereafter, it commenced implementing a strategy
designed to make it a product and service, rather than a systems, driven
business. This strategy required it to make a variety of investments in human
resources, management systems and product development which negatively impacted
earnings during the three months ended September 30, 1996. The Company believes
that it will begin realizing the benefits from these investments during the
second half of fiscal 1997, although no assurances thereof can be given. For
these reasons, it is likely that the Company will incur operating losses during
the second and third quarters of fiscal 1997.
The investments include (i) hiring a new chief financial officer, (ii)
expanding the Company's software development capabilities, (iii) developing and
implementing new management control and reporting systems,(iv)hiring new sales
and marketing professionals, (v) conducting a sophisticated analysis of the
Company's marketplace, and (vi) acquiring the rights to certain new products
which fit well into the Company's overall strategy. Many of these investments
were made late in fiscal 1996 and, therefore, the three-month period ended
September 30, 1996 is the first fiscal quarter to reflect these costs for the
entire reporting period.. In addition, operating results were significantly
impacted by several transactions which took place during the three months ending
September 30, 1996 and related to the engagement of a financial public relations
and acquisition consultant, the issuance of nonqualified stock options and the
cancellation of the Underwriting Agreement (see Note 3 of
<PAGE>
"Notes to Financial Statements"). Management believes that each of these
expenditures and transactions will contribute positively to future shareholder
value, although no assurance thereof can be given. There were no similar
investments or transactions during the three-month period ended September 30,
1995.
The Company is implementing a strategy to reduce its dependence on
large contracts by increasing its focus on products sales. Its product
development efforts have resulted in the recent introduction of two new
products, and several other are under development. No assurance can be given
that the Company will be successful in these efforts.
A comparison of operating results between the periods follows:
Caption 9/30/96 % 9/30/95 % Change %
Contract and othe$488,610 100% $479,227 100% $9,383 2%
revenues
Cost of revenues 480,133 98% 66% 163,231 52%
316,902
Gross profit 8,477 2% 162,325 34% -153,848 -95%
Expenses
Personnel and related138,578 28% 60,909 13% 77,669 128%
costs
Selling & 185,853 38% 44,752 10% 141,101 315%
administration
expenses
Product development 74,236 15% 26,350 5% 47,886 182%
costs
Occupancy costs 11,157 2% 8,822 2% 2,335 26%
Total Expenses 409,824 84% 140,833 29% 268,991 191%
Operating income -401,347 -82% 21,492 4% -422,839
(loss)
Nonrecurring charges-444,331 -91% -444,331
Interest-Net 21,517 4% 6,830 1% 14,687 215%
Income before income-824,161 -169% 14,662 3% -838,823
taxes
Income Taxes-Net 525 0% -525
Net income (loss) ($824,161) -169% $14,137 3% -838,298
Revenues were substantially the same for the three-month period ended
September 30, 1996 compared with the comparable period in 1995. The gross margin
for the three-month period ended September 30, 1996 was substantially below the
corresponding percentage in 1995 because the Company incurred greater than
expected costs on two large contracts involving the installation of a
newly-introduced product. The Company believes that it has "debugged" this new
product, and that similar problems should not recur on future installations,
although there can be no assurance. The Company also hired several new engineers
and incurred the customary time and costs associated with training.
Operating expenses are not comparable between periods because the 1996
period includes the costs associated with (i) hiring a new chief financial
officer, (ii) expanding the Company's software development capabilities, (iii)
developing and implementing new management control and reporting systems,
(iv)hiring new sales and marketing professionals, (v) conducting a sophisticated
analysis of the Company's marketplace, and (vi) acquiring the rights to certain
new products which fit well into the Company's overall strategy. In addition,
the Company incurred costs associated with its board of directors and
shareholders amounting to $50,089, There were substantially no comparable costs
incurred in 1995.
Product development costs increased because the Company hired four
engineers who devote a significant portion of their time to developing or
enhancing software products.
The costs referred to above were incurred, by necessity, in advance of
realizing benefits therefrom. The new resources have permitted the Company to
increase its product development efforts, develop advertising and promotional
materials, participate in important industry tradeshows and increase its
proposal activities. The Company believes that the benefits from these efforts
will commence early in 1997, although no assurance thereof can be given.
The nonrecurring charges principally relate to costs associated with
engaging a financial public relations firm for the purpose of giving the Company
greater recognition and visibility in the financial community and terminating
the Company's relationship with its former underwriter. A detailed listing and
description of these charges, which include noncash items aggregating $199,375,
is set forth in Note 3 to the Condensed Financial Statements included elsewhere
herein. Management does not anticipate incurring
<PAGE>
similar charges in the future.
Interest-net consists of interest income on time deposits less interest
expense incurred on a $375,000 note payable to a bank.
The Company has established reserves for the entire benefit associated
with the unused income tax loss carryforwards because the Company must realize
income in the future to utilize such carryforwards.
The Company believes that it must increase its annual net revenues to
approximately $3,300,000 to operate at a breakeven level given its current cost
structure.
Liquidity and Capital Resources
The Company completed an initial public offering of its common stock
and warrants in March 1996. The net proceeds therefrom ($3,114,500) provide the
Company with adequate liquidity and resources to meet its operating needs during
the foreseeable future. However, the Company would require additional capital or
other form of financing if it identifies an attractive acquisition target or
other major nonoperating project. In July 1996, the Company engaged a financial
public relations and acquisition consultant. Management will consider making an
acquisition if such an acquisition will expedite the Company achieving its
goals.
The Company is obligated for a $375,000 bank loan dated March 8, 1996
which is collateralized by a certificate of deposit. Such loan bears interest at
the rate of 5.85 percent per annum and is due on April 1, 1997. The proceeds of
this bank loan were used to repay indebtedness due principally to trusts for
family members of Company officers. The bank loan is at a rate more favorable to
the Company than the loans which were repaid.
The Company is considering negotiating a formal credit facility with a
bank, although no additional sources of funds are necessary at this time for
operating purposes.
Seasonality
The demand for the Company's products is not seasonal. However, lengthy
stretches of inclement weather can create delays in the performance of some
systems contracts.
Recent Accounting Pronouncements
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS No. 123"), which encourages companies to account for
stock-based compensation programs and transactions on a fair value-based method,
as defined therein. If the fair value-based method is not adopted, SFAS No. 123
requires pro forma footnote disclosure of net operating results and earnings per
share as if the fair value-based method had been adopted. The Company issued
stock options for the first time during the three-month period ended September
30, 1996 (see "Notes to Condensed Financial Statements") and expects to account
for such options based on their intrinsic values with disclosure about the
impact of such options if they had been accounted for at fair value. Based on
information available to date, the Company does not expect the impact of
applying SFAS No. 123 to be material. SFAS No. 123 is effective for transactions
occurring after December 15, 1995.
<PAGE>
PART II OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
See Note 3 to the
Condensed Financial Statements
Item 3 Defaults on Senior Securities
None
Item 4 Submission of Matters to a Vote of
Shareholders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
None
<PAGE>
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.
THERMO-MIZER ENVIRONMENTAL CORP.
(Registrant)
/s/Jon J. Darcy
Jon J. Darcy
President and CEO
/s/Prem Chopra
Prem Chopra
Chief Financial Officer
Date: November 10, 1996
<PAGE>
This schedule contains summary financial information extracted from the
Company's Balance Sheet at September 30, 1996 and the Statement of Operations
for the fiscal year then ended and is qualified in its entirety by reference to
such financial statements and the notes thereon.
Period 3 months
Fiscal Year End June 30
Period Start July 1, 1996
Period End September 30
Cash and cash items 1,510,218
Accounts receivable - trade 786,314
Allowance for doubtful accounts 15,000
Inventory 331,358
Current assets 3,334,925
Property and equipment 515,257
Accumulated depreciation 350,921
Total assets 3,645,127
Total current liabilities 895,750
Common stock 1,921
Other stockholders' equity 2,765,456
Liabilities & stockholders' equity 3,645,127
Net sales 488,610
Total revenues 488,610
Cost of goods sold 480,133
Total costs and expenses 409,824
Interest - net 21,517
Nonoperating costs 444,331
Loss before taxes (824,161)
Income tax benefit 0
Net loss (824,161)
Loss per share (.43)
<PAGE>
Exhibit Index
Exhibit Description
Exhibit 27 Financial Data Schedule, which is submitted
electronically to the Securities and
Exchange Commission for information
only and not filed.
<PAGE>
