UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[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 ______
LARK TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 73-1461841
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9545 KATY FREEWAY, SUITE 465
HOUSTON, TX 77024
(Address of principal executive offices)
(713) 464-7488
(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 [ ]
APPLICABLE ONLY TO ISSUER 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
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 1996, there were 3,315,300 shares of Common Stock, par value
$0.001 per share, outstanding.
Transitional Small Business Disclosure Format (Check one): Yes No [X]
<PAGE>
LARK TECHNOLOGIES, INC.
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1996.
Part I Financial Information (unaudited)
Page
Item 1. Financial Statements
Balance Sheet ........................................ 1
Statements of Operations ............................. 2
Statements of Cash Flows ............................. 3
Notes to Financial Statements ........................ 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............. 6
Part II Other Information .............................................. 8
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 ........ 8
Item 5. Other Information .......................................... 8
Item 6. Exhibits and Reports on Form 8-K ........................... 8
Signatures.............................................................. 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
BALANCE SHEET
September 30,
1996
-------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 854,030
Accounts receivable ................................. 929,987
Due from related parties ............................ 1,525
Work-in-process ..................................... 187,914
Prepaid expenses .................................... 46,501
-----------
Total current assets .................................... 2,019,957
Property and equipment, net ............................. 339,247
Other assets, net ....................................... 47,680
===========
Total assets ............................................ $ 2,406,884
===========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Notes payable ....................................... $ 285,056
Debentures payable .................................. 45,000
Accounts payable .................................... 318,924
Accrued expenses .................................... 229,161
Customer deposits ................................... 284,349
Deposits from
related parties ..................................... 104,711
-----------
Total current liabilities ............................... 1,267,201
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001
par value:
Authorized shares - 2,000,000
None issued and outstanding
Common stock, $0.001 par value:
Authorized shares - 8,000,000
Issued and outstanding shares - 3,315,300 ...... 3,315
Additional paid-in capital .......................... 2,457,501
Amounts due from shareholders ....................... (65,045)
Accumulated deficit ................................. (1,256,088)
-----------
Total stockholders' equity .............................. 1,139,683
-----------
Total liabilities and stockholders' equity .............. $ 2,406,884
===========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
1995 1996 1995 1996
-------------------------- --------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue:
Laboratory Services ......... $ 494,176 $ 886,121 $ 1,832,619 $ 3,368,054
Costs and expenses:
Costs of services ........... 278,301 439,946 852,303 1,421,686
Sales, general and
administrative .............. 520,691 457,691 1,225,794 1,488,879
Research and
Development ................. 15,485 28,813 15,485 90,184
----------- ----------- ----------- -----------
Total costs and expenses ........ 814,477 926,450 2,093,582 3,000,749
----------- ----------- ----------- -----------
Operating income (loss) ......... (320,301) (40,329) (260,963) 367,305
Other income and
(expense):
Interest expense ............ (4,903) (21,150) (13,586) (66,504)
Interest income ............. 569 10,886 4,612 13,313
Gain on disposal of
assets ...................... 0 0 300 0
----------- ----------- ----------- -----------
Total other (expense),
net ............................. (4,334) (10,264) (8,674) (53,191)
----------- ----------- ----------- -----------
Income (loss) before income
taxes ........................... (324,635) (50,593) (269,637) 314,114
Income taxes .................... 0 0 0 0
----------- ----------- ----------- -----------
Net income (loss) ............... (324,635) (50,593) (269,637) 314,114
=========== =========== =========== ===========
Net income (loss) per
share ........................... ($ 0.16) ($ 0.02) ($ 0.13) $ 0.12
=========== =========== =========== ===========
Weighted average number of common
or equivalent shares
outstanding ................. 2,000,000 3,180,459 2,000,000 2,580,458
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
Nine months ended
September 30,
-------------------------
1995 1996
-------------------------
(Unaudited)
OPERATING ACTIVITIES
Net income ........................ ($269,637) $ 314,114
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and
amortization .................. 132,579 139,800
Loss/(Gain) on disposal
of assets ..................... (300) 0
Changes in operating assets and
liabilities:
Accounts receivable ...... 90,625 (505,325)
Work-in-process .......... (1,021) (98,764)
Prepaid expenses ......... 44,192 (23,867)
Other assets ............. (110,515) 37,202
Due to/from related
parties .................. 9,197 (18,408)
Accounts payable ......... 88,403 41,885
Accrued expenses ......... 57,858 9,082
Deposits ................. 111,080 75,165
--------- -----------
Net cash provided by
operating activities .............. 152,461 (29,116)
INVESTING ACTIVITIES
Purchases of property and
equipment ......................... (82,909) (198,383)
Proceeds from disposal of property
and equipment ..................... 300 0
--------- -----------
Net cash used in
investing activities .............. (82,609) (198,383)
FINANCING ACTIVITIES
Proceeds from issuance of
notes payable ..................... 150,000 60,136
Principal payments on notes
payable ........................... (33,135) (94,676)
Proceeds from issuance of
common stock ...................... 200 1,040,072
Repayment of debentures
payable ........................... (25,000) 0
Cost of issuing
preferred stock ................... 0 --
--------- -----------
Net cash provided by
financing activities .............. 92,065 1,005,532
--------- -----------
Net increase (decrease) in cash and
cash equivalents .................. 161,917 778,033
Cash and cash equivalents at
beginning of period ............... 25,834 75,996
========= ===========
Cash and cash equivalents at end of
period ............................ $ 187,751 $ 854,029
========= ===========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
3
<PAGE>
LARK TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Lark Technologies, Inc., a Delaware corporation (the "Company"), was
formed on November 16, 1994, as a wholly-owned subsidiary of SuperCorp Inc.
("SuperCorp"), for the purpose of merging with Lark Sequencing Technologies,
Inc., a Delaware corporation ("Sequencing"), as outlined in a merger agreement
("Merger Agreement") entered into by SuperCorp and Sequencing on October 28,
1994. The Merger Agreement was approved by SuperCorp on September 5, 1995, and
by the stockholders of Sequencing on September 12, 1995. As a consequence of the
merger, all of the shares of common and preferred stock of Sequencing were
exchanged for 1,800,000 shares of Common Stock of the Company with a par value
of $0.001 per share and the 200,000 shares of Common Stock of the Company held
by SuperCorp were distributed to the shareholders of SuperCorp. The Company has
succeeded to all of the business previously undertaken by Sequencing. Lark
provides specialized laboratory services for DNA sequencing to biotechnology
researchers.
2. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to these rules and regulations. The
accompanying unaudited interim financial statements reflect all adjustments
which the Company considers necessary for a fair presentation of the results of
operations for the interim periods covered and for the financial condition of
the Company at the date of the interim balance sheet. All such adjustments are
of a recurring nature. Results for the interim periods are not necessarily
indicative of results for the year.
For financial reporting purposes, the merger of the Company and Sequencing
has been accounted for as a recapitalization of Sequencing, and the historical
financial statements of Sequencing prior to the merger became the financial
statements of the Company. The financial statements of Sequencing have been
retroactively restated to give effect to the merger transaction as if it had
occurred on January 1, 1994.
3. NOTES PAYABLE AND DEBENTURES
On September 30, 1996, the Company had two notes payable to a bank with
interest of prime plus 2% (10.25% at September 30, 1996) which were
collateralized by accounts receivable, property and equipment. One of the notes
was a line of credit with a maximum borrowing limit of $200,000 which was to
expire on January 2, 1997. the second, in the amount of $58,726, was an
installment note also originally due on January 2, 1997.
The line of credit and demand note were guaranteed by certain stockholders
of the Company. In exchange for the guarantees, the Company issued to each
guarantor, on a pro-rata basis, warrants to purchase a total of 106,533 shares
of unregistered common stock of the Company at an exercise price of $0.1479. The
warrants were written to expire December 31, 1997.
On July 25, 1996, the Company arranged for the release of the guarantees
and extended the maturities of the line of credit and demand note to March 31,
1997. The Company repurchased half of the warrants for $0.1479 per share on
August 7, 1996, and accrued the expenses related to this repurchase during the
second quarter of 1996.
In addition to the bank notes, the Company also had two notes payable
incurred in September, 1996, to finance insurance policy premiums which totaled
$30,616. These two debts were installment notes bearing various interest rates
and due in full in September, 1997.
4
<PAGE>
At September 30, 1996, the Company had subordinated redeemable debentures
payable of $45,000 that matured on September 30, 1996, with interest at 8% per
year, payable quarterly. The Company offered to renew the subordinated
debentures through March 31, 1997. As of November 6, 1996, payment of $10,000
has been requested and the holders of the remainder of the subordinated
debentures have not demanded payment.
4. RIGHTS OFFERING OF COMMON STOCK
On July 17, 1996, the Company completed a Rights Offering of Common Stock
to its shareholders of record of May 31, 1996. The Company sold 1,105,075 shares
of Common Stock at $1 per share, and received net proceeds of approximately
$1,040,072.
5. EARNINGS PER SHARE
Net income per share was calculated by dividing the Company's net income
for the period by the weighted average number of common stock and dilutive
common stock equivalents (stock options and warrants) outstanding.
6. COMMITMENTS AND CONTINGENCIES
PATENT LICENSE AGREEMENT
Effective June 15, 1995, the Company entered into an exclusive patent
sub-license agreement with another biotech company. The agreement grants to the
Company an exclusive license to certain "Licensed Patent Rights" of this third
party and requires the Company to perform research and development efforts as
defined in the agreement. The Company is required to pay the third party a
royalty of 25% to 50% of all consideration the Company receives as a result of
sales of licensed products and licensed processes or a sub-license or assignment
of the Company's rights under the agreement. If the Company does not meet the
research and development milestones as defined in the agreement, or is unable to
successfully commercialize the results of the research and development efforts,
the agreement will terminate. Otherwise, the agreement will terminate upon the
dissolution of the Company or the expiration of the "Licensed Patent Rights".
The agreement may also be terminated by the Company with 60 days written notice
to the third party.
SPONSORED RESEARCH CONTRACT AND CONSULTING AGREEMENT
The Company entered into a sponsored research contract on August 1, 1995,
whereby the Company is required to fund certain research and development efforts
being performed by Baylor College of Medicine ("Baylor"). The research and
development is being performed pursuant to the Patent License Agreement
described in this Note. The agreement expired on July 31, 1996, and required the
Company to pay Baylor a total of $53,739 in monthly installments over the term
of the contract. During July 1996, the agreement was extended with the same
terms through July 31, 1997.
The Company entered into a related consulting agreement with the Principal
Investigator at Baylor. This agreement expired on August 1, 1996, and required
the Company to pay the researcher a total of $24,000 in monthly installments
over the term of the contract. During July 1996, the agreement was extended with
the same terms through July 31, 1997.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and the accompanying Notes herein, and is qualified
entirely by the foregoing and by other more detailed financial information
appearing elsewhere.
GENERAL
Lark Technologies, Inc. ("Lark" or "the Company") is a successor in
interest, through a merger effected in September 1995, to Lark Sequencing
Technologies, Inc., which was incorporated under the business corporation laws
of the State of Delaware on May 4, 1990.
Lark is a leader in providing contract DNA sequencing and research
services to the pharmaceutical and biotechnology industries worldwide. Lark's
service portfolio consists of various DNA sequencing and molecular biology
services as follows:
o AUTOMATED DNA SEQUENCING SERVICES. Lark applies automated sequencing
techniques to generate high throughput DNA sequence and fast turnaround
screening information, including genome sequencing projects.
o MANUAL DNA SEQUENCING SERVICES. Lark uses manual sequencing techniques for
projects that require greater than 99.9% accuracy. These techniques are
useful for DNA sequence information that is used for patent applications,
FDA submissions or the identification of genetic mutations.
o LIBRARY SCREENING SERVICES. During the gene discovery process, customers
may find only a portion of a gene of interest. As a service, Lark will use
a customer's gene fragment to probe a genetic library to identify a full
length gene. Identification of full length genes is necessary for
determining a gene's function, developing novel drugs, and securing patent
rights.
o DIFFERENTIAL DISPLAY SERVICE. Lark uses differential display techniques for
analyzing differences in gene expression caused by the introduction of
various drug compounds, viruses or stimulatory factors. Differential
display can be useful in identifying novel genes and gene functions. By
understanding how and when a gene is expressed or repressed, targeted
interventions can be developed to maximize results and minimize harmful
side effects. This service is used to discover novel genes as well as to
characterize pharmaceutical effects.
Lark has also undertaken a senescence gene discovery program for its own
account. In 1995, the Company obtained exclusive rights to senescence gene
technology developed at Baylor College of Medicine, subject to third party
royalty rights and development obligations. Senescence is the final stage of
cellular aging when a cell ceases to divide but remains viable. The genes which
control this process regulate cell immortality. The major disease target for
this gene technology is cancer. Animal studies have demonstrated the ability of
this technology to reduce tumor growth at statistically significant levels. Lark
is actively pursuing the discovery of these novel genes and intends to exploit
the diagnostic and therapeutic applications of the technology by forging
appropriate corporate relationships. The Company considers this to be a highly
speculative project. Although the Company would benefit from the success of this
project, this project is not essential to the success of the Company.
RESULTS OF OPERATIONS
GROSS REVENUES. Gross revenues increased 79% from $494,176 to $886,121 for
the three month periods ended September 30, 1995 and 1996, respectively. Gross
revenues increased 84% from $1,832,619 to $3,368,054 for the nine month periods
ended September 30, 1995 and 1996, respectively. This increase in revenues was
attributable to an increase in new customer accounts for both the automated and
manual sequencing services provided by the Company. Management believes that the
increase in manual sequencing revenues is attributable to increased sales and
advertising activities while the increase in automated sequencing revenues was
due to the work performed for a contract with a single customer.
6
<PAGE>
COSTS OF SERVICES. Costs of services consist primarily of labor and
laboratory supplies. Costs of services increased 58% from $278,301 to $439,946
for the three month periods ended September 30, 1995 and 1996, respectively, and
67% from $852,303 to $1,421,686 for the nine month periods ended September 30,
1995 and 1996, respectively. Increases in personnel, supply usage and equipment
costs as a result of the increase in services rendered comprised the increase in
operating costs. Costs of services as a percentage of revenue were 56% and 50%
for the three month periods ending September 30, 1995 and 1996, respectively,
and 47% and 42% for the nine month periods ending September 30, 1995 and 1996,
respectively.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES. Sales, general and
administrative expenses consist primarily of salaries and related costs,
depreciation, amortization, legal and professional costs, rent, travel, and
advertising. Sales, general and administrative expenses decreased 12% from
$520,691 to $457,691 for the three month periods ended September 30, 1995 and
1996, respectively, and increased 21% from $1,225,794 to $1,488,879 for the nine
month periods ended September 30, 1995 and 1996, respectively. Sales, general
and administrative expenses as a percentage of revenue were 105% and 52% for the
three month periods ending September 30, 1995 and 1996, respectively, and 67%
and 44% for the nine month periods ended September 30, 1995 and 1996,
respectively. During the third quarter of 1995 a change in management resulted
in one-time unusual expenses totaling approximately $120,000. The increases in
expenses are attributable to various costs incurred to support the growth of the
company. These growth related costs consist primarily of increased personnel
costs in the United States and Europe, certain commissions on contracts, an
increase in amortization of certain capitalized costs, and fees related to
public disclosure REQUIREMENTS.
RESEARCH AND DEVELOPMENT. Research and development costs increased 86%
from $15,485 to $28,813 for the three month periods ended September 30, 1995 and
1996, respectively, and 482% from $15,485 to $90,184 for the nine month periods
ended September 30, 1995 and 1996, respectively. Research and development costs
as a percentage of revenue were 3% and 3% for the three month periods ended
September 30, 1995 and 1996, respectively, and 1% and 3% for the nine month
periods ended September 30, 1995 and 1996, respectively. There were no research
and development costs incurred during the first six months of 1995. Research and
development costs during 1996 were related to the gene senescence project
described above. Research and development expenses are likely to increase as a
result of this project. Lark will need additional capital in order to expand its
research and development efforts.
VARIABILITY OF FUTURE OPERATING RESULTS. The Company experienced a
significant revenue increase in the latter half of 1994, due in large part to
the commencement of the first contract with a single customer. This first
contract was substantially completed during the first quarter of 1995. In
December 1994, a second, similar contract with this customer was signed.
Operations for the second contract began in the fourth quarter of 1995 and were
substantially completed during the first quarter of 1996. A third, similar
contract was signed and commenced in the second quarter of 1996. The third
contract was substantially completed during the second and third quarters of
1996. The Company has a "baseline" of projects from clients which it believes
will provide a sustainable level of revenues, although no assurances can be made
that this will be true in the future. The addition or completion of any single
large contract may have a material impact on the Company's revenues.
LIQUIDITY AND CAPITAL RESOURCES. The Company has experienced increased
demands on working capital due to actual and anticipated growth in all current
services. Operating cash flow was $215,057 and ($29,116) for the nine month
periods ended September 30, 1995 and 1996, respectively. The Company's remaining
subordinated debentures totaling $45,000 matured September 30, 1996. The Company
offered to renew this debt through March 31, 1997. As of November 6, 1996,
payment of $10,000 has been requested and the holders of the remainder of the
subordinated debentures have not demanded payment.
On April 26, 1996, the Company renewed its line of credit through January
2, 1997, accelerated the maturity of a portion of its notes payable to January
2, 1997, and repaid the remainder of its demand notes payable. Then, on July 25,
1996, the Company arranged to extend the maturities of the line of credit and
demand note to March 31, 1996. See Note 3 of the Notes to the Financial
Statements for additional discussion of the renewed debt.
During the first nine months of 1996, the Company purchased computer
equipment and laboratory equipment and fixtures totaling $198,383 to support its
operating growth. Management anticipates that additional
6
<PAGE>
capital expenditures necessary to support the Company's operating growth can be
funded through a combination of existing or proposed credit facilities and
future operating results.
The Company has committed to certain minimum expenditures related to its
senescence research and development efforts as outlined in Note 6 to the
Financial Statements ("Patent License Agreement" and "Sponsored Research
Contract and Consulting Agreement"). Lark will need additional capital in order
expand its research and development efforts beyond the levels required by these
agreements.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
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
No reports on Form 8-K were filed during the quarter ending
September 30, 1996.
INDEX OF EXHIBITS
2.1(1) The Agreement of Merger of November 18, 1994, between Lark
Technologies, Inc. and Lark Sequencing Technologies, Inc.
providing for the merger of Lark Sequencing Technologies, Inc.
into the Company.
3.1(1) Bylaws of Lark Technologies, Inc., as amended.
3.2(1) The Certificate of Incorporation of Lark Technologies, Inc., as
amended.
10.1(1) 1990 Stock Option Plan adopted by the Company.
10.13(2) Agreement entered into by and between the Company and Genomyx
Corporation.
10.14(2) The portion of the Minutes of the Executive Session of the
Meeting of the Board of Directors of the Company held December
8, 1995, establishing and defining the bonus plan for 1996 under
which the chief executive officer, chief financial officer, and
other employees may receive cash bonuses as part of their
compensation.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-4 dated August 14, 1995, Commission File No. 33-90424. The exhibit numbering
system used in Form S-4 differed from that used in this Form 10-QSB (8a, 2d, 2c,
6b, 6c, 6d-1, and 6f, respectively).
(2) Incorporated by reference from the Company's Form 10-QSB for the quarterly
period ended March 31, 1996.
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Lark Technologies, Inc.
(Registrant)
Date NOVEMBER 13, 1996 /s/ VINCENT P. KAZMER
Vincent P. Kazmer
President and Chief Executive Officer
Date NOVEMBER 13, 1996 /s/ DOUGLAS B. WHEELER
Douglas B. Wheeler
Vice President, Finance
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 854,030
<SECURITIES> 0
<RECEIVABLES> 931,512
<ALLOWANCES> 0
<INVENTORY> 187,914
<CURRENT-ASSETS> 2,019,957
<PP&E> 1,023,656
<DEPRECIATION> 684,409
<TOTAL-ASSETS> 2,406,884
<CURRENT-LIABILITIES> 1,267,201
<BONDS> 0
0
0
<COMMON> 3,315
<OTHER-SE> 1,136,368
<TOTAL-LIABILITY-AND-EQUITY> 2,406,884
<SALES> 3,368,054
<TOTAL-REVENUES> 3,368,054
<CGS> 1,421,686
<TOTAL-COSTS> 3,000,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,504
<INCOME-PRETAX> 314,114
<INCOME-TAX> 0
<INCOME-CONTINUING> 314,114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 314,114
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
