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 March 31, 2000
[_] 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.)
9441 WEST SAM HOUSTON PKWY. SOUTH
HOUSTON, TX 77099
(Address of principal executive offices)
(713) 779-3663
(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 March 31, 2000, there were 3,455,279 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 MARCH 31, 2000.
Part I Financial Information (unaudited)
PAGE
Item 1. Financial Statements
Balance Sheet.................................... 1
Statements of Income............................. 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 ......... 7
Part II Other Information...................................... 9
Item 1. Legal Proceedings...................................... 9
Item 2. Changes in Securities.................................. 9
Item 3. Defaults Upon Senior Securities........................ 9
Item 4. Submission of Matters to a Vote of Security Holders.... 9
Item 5. Other Information...................................... 9
Item 6. Exhibits and Reports on Form 8-K ...................... 9
Signatures......................................................... 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 2000
--------------
(Unaudited)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 828,361
Accounts receivable (net) .................................... 704,003
Due from related parties ..................................... 9,064
Work-in-process .............................................. 158,730
Finished Goods ............................................... 149,656
Prepaid expenses ............................................. 74,091
--------------
Total current assets .................................................... 1,923,905
Property and equipment, net ............................................. 1,100,196
Other assets, net ....................................................... 30,390
--------------
Total assets ............................................................ $ 3,054,491
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 557,407
Notes payable ................................................ 472,219
Capital lease obligations-current portion .................... 132,051
Accrued expenses ............................................. 115,665
Customer deposits ............................................ 656,496
Deposits from related parties ................................ 86,889
--------------
Total current liabilities ............................................... 2,020,727
Note payable-long term portion .......................................... 6,111
Capital lease obligations-long term portion ............................. 113,048
--------------
Total Liabilities: ...................................................... 2,139,886
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 shares:3,459,779 and outstanding shares: 3,455,279 3,464
Additional paid-in capital ................................... 2,598,615
Treasury Stock at cost ....................................... (4,946)
Amounts due from shareholders ................................ (15,045)
Accumulated deficit .......................................... (1,667,483)
--------------
Total stockholders' equity .............................................. 914,605
--------------
Total liabilities and stockholders' equity .............................. $ 3,054,491
==============
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
STATEMENTS OF INCOME
Three months Ended March 31,
---------------------------
1999 2000
------------ -----------
(Unaudited)
Revenue:
Laboratory Services ................... $ 1,242,849 $ 1,201,793
Costs and expenses:
Costs of services ..................... 843,921 750,747
Sales, general and administrative ..... 572,420 443,197
Research and development .............. 8,415 0
------------ -----------
Total costs and expenses ......................... 1,424,756 1,193,944
------------ -----------
Operating income (loss) .......................... (181,907) 7,849
Other income and (expense):
Interest expense ...................... (17,258) (20,246)
Interest income ....................... 2,746 636
------------ -----------
Total other income (expense) ..................... (14,512) (19,610)
------------ -----------
Loss before income taxes ......................... (196,419) (11,761)
Provision for income taxes ....................... 0 0
------------ -----------
Net loss ......................................... $ (196,419) $ (11,761)
============ ===========
Basic and diluted loss per common share .......... (0.06) (0.00)
============ ===========
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARK TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months ended March 31,
--------------------------
1999 2000
----------- -----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ...................................................... $ (196,419) $ (11,761)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization ....................... 73,688 79,385
Changes in operating assets and liabilities:
Accounts receivable ............................ (104,962) 220,906
Work-in-process ................................ 112,951 (78,659)
Prepaid expenses ............................... 7,468 17,922
Other Assets ................................... 0 359
Accounts payable ............................... 11,794 (55,130)
Accrued expenses ............................... (12,774) (47,082)
Deposits ....................................... (61,291) 521,794
----------- -----------
Net cash provided by (used in) operating activities ........... (169,545) 647,734
INVESTING ACTIVITIES
Purchases of property and equipment ........................... (67,747) (100,170)
----------- -----------
Net cash used in investing activities ......................... (67,747) (100,170)
FINANCING ACTIVITIES
Proceeds from issuance of notes payable ....................... 150,000 106,500
Principal payments on notes payable ........................... (46,627) (109,325)
Principal payments on capital leases .......................... -- (72,692)
Proceeds from exercised stock options ......................... -- 104,234
Proceeds from exercised warrants .............................. -- 12,500
Redemption of warrants ........................................ -- (31,250)
----------- -----------
Net cash provided by financing activities ..................... 103,373 9,967
----------- -----------
Net increase (decrease) in cash and cash equivalents .......... (133,919) 557,531
Cash and cash equivalents at beginning of period .............. 465,506 270,830
----------- -----------
Cash and cash equivalents at end of period .................... $ 331,587 $ 828,361
=========== ===========
</TABLE>
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. SuperCorp approved the Merger Agreement 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. ACCOUNTING POLICIES
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.
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements ("SAB
101"), which the Company is required to adopt in the first quarter of 2000. In
March 2000, the SEC issued SAB 101A and temporarily delayed adoption. SAB 101
clarifies how existing revenue recognition rules should be applied. The Company
is currently evaluating their revenue recognition policies and the effect of
adoption.
RECLASSIFICATIONS
Certain amounts in prior years have been reclassified to conform to the 2000
presentation.
3. INVENTORY
Finished goods inventory consists of the direct and indirect costs to
produce quantitative polymerase chain reaction (QPCR) assays held for resale. At
March 31, 2000 finished goods inventory was $149,656.
Work in process inventory includes the direct and indirect costs
associated with projects that had been started but not yet completed at March
31, 2000. Direct costs include such items as the cost of labor, reagents and
4
<PAGE>
supplies directly associated with each project. Indirect costs include such
items as general supplies, laboratory management, depreciation, and costs to
operate the lab. These costs are applied to each project on the basis of direct
labor hours incurred for the project, up to the point of measurement, such as
the end of an accounting period. At March 31, 2000, work in process inventory
was $158,730.
4. NOTES PAYABLE
On December 31, 1999, the Company renewed its revolving line of credit and
extended the maturity to December 31, 2000. Under the terms of its revolving
line, the company may borrow up to $600,000 at the bank's prime rate (8.75% at
March 31, 2000) plus 2%. The borrowing base of this line of credit is equal to
80% of certain accounts receivable that are no more than 90 days old. At March
31, 2000 the Company had $366,787 outstanding under this line. Under the terms
of the revolving line of credit agreement, the Company is required to maintain
certain financial ratios and a specific level of net worth. During the quarterly
measuring period ending March 31, 2000, the Company was not in compliance with
one of the ratio requirements of the covenants but obtained a waiver from the
bank for the period ending March 31, 2000.
On March 13, 1998, the Company arranged an advised discretionary credit
line for the financing of equipment with the same bank used for the new
revolving credit line. Under the terms of this discretionary credit, the company
may borrow up to $600,000 secured by the equipment purchased with the proceeds
of the borrowings. This discretionary credit line provides for borrowings of up
to 75% of the purchase price of equipment at the bank's prime plus 1.5%. This
credit line provides for repayment terms up to 36 months and matured on May 31,
1999. On January 5, 1999, the Company borrowed $22,000 against this line of
credit for the purchase of lab equipment. As, of March 31, 2000 a balance of
$13,444 remained on this loan.
On July 13, 1999, the Company arranged a $200,000 term loan from the same
bank that extended the revolving credit facility. Under the terms of the loan,
the Company was to make substantially equal payments over a six-month period
ending with the last payment on January 15, 2000. On January 13, 2000 the
Company made the final payment on this loan and arranged for the release of the
personal guarantees, which secured this term loan.
On March 31, 2000, the Company arranged a $75,000 term loan from the same
bank that extended the revolving credit facility. Under the terms of the loan,
the Company is to make substantially equal payments over a nine-month period
ending with the last payment on November 18, 2000. Interest is payable monthly
at the bank's prime rate (8.75% at March 31, 2000) plus 2%. At March 31, 2000,
the Company owed $66,667 under this note.
5. EARNINGS PER SHARE
The following table sets forth the weighted average shares outstanding for
the computation of basic and diluted earnings per share:
For the three months
ending March 31,
-----------------------
1999 2000
--------- ---------
Weighted average common shares outstanding ......... 3,319,546 3,387,288
Dilutive securities - employee stock options ....... -- --
--------- ---------
Weighted average common shares outstanding
Assuming full dilution ........................... 3,319,546 3,387,288
========= =========
Options to purchase 248,000 and 293,874 shares of common stock were
outstanding during 1999 and 2000 respectively, but were not included in the
computation of diluted earnings per share because the effect would be
antidilutive.
5
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
STOCK OPTIONS AND WARRANTS
During July of 1999, certain stockholders provided $250,000 in personal
guarantees as collateral for a $200,000 term loan for the Company. In exchange
for their guarantees, these stockholders received warrants to purchase a total
of 250,000 shares of the Companies common stock. One half of these warrants were
redeemable if the underlying loan was paid within terms. On January 13, 2000,
the Company redeemed 125,000 warrant shares at $.25 per share. The remaining
warrants are not redeemable by the company and exercisable from June 30, 1999
until June 30, 2002. As of March 31, 2000, 50,000 of these warrants had been
exercised.
During February and March 2000, options to purchase 90,233 shares of
common stock were exercised at various prices, ranging from $.47 to $2.00 per
share.
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 Company may also terminate the agreement with 60 days written notice to the
third party.
SPONSORED RESEARCH CONTRACT
On October 6, 1999, the Company announced the restructuring of its
senescence technology development program. Sennes Drug Innovations, Inc.
(Sennes), the Company's licensor for the senescence technology, which originated
with a third party, recently appointed a new president. This appointment was
allowed by the settlement of various technology transfer issues between the
third party and Sennes. This new president will represent the Sennes
technologies, including the senescence gene technology licensed to the Company,
to third parties. The Company's license for senescence technologies remains
intact.
The senescence technology includes genes involved in regulating the four
senescence gene pathways. Senescence is the normal physiological process that
controls cellular immortality. Immortal cells are closely related to cancer and
can add insights into aging and abnormal development.
6
<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 leading molecular biology Contract Research Organization (CRO)
providing 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 GENETIC STABILITY TESTING SERVICES. Lark's genetic stability testing
services are used to characterize Master Cell Banks, Manufacturers Working
Cell Banks and PostProduction Cell Samples from bacterial, yeast and cell
cultures. Genetic stability testing is used to analyze production strains
stability and demonstrate that the expression system has not undergone any
mutations or rearrangements that would affect the integrity of the
product. This service assists companies producing genetically manufactured
products to optimize production yields, determine product purity, and
support regulatory submissions. This service was introduced in late 1996.
o QUANTITATIVE POLYMERASE CHAIN REACTION (PCR) SERVICES. Lark uses
Quantitative PCR techniques to measure the distribution and expression of
target DNA or RNA in a customer's sample from cultured cells,
microorganisms, or tissues such as brain, lung, liver and kidneys.
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 MOLECULAR BIOLOGY SERVICES. Lark offers a variety of molecular biology
services including library screening, library prescreening, southern blot
analysis, subcloning, plasmid preparation and PCR amplification. Lark
consults with its customers to customize a broad range of molecular
biology projects.
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.
In 1995 Lark undertook a senescence gene discovery program for its own
account. Although several genes were discovered in this program, lack of gene
functionality coupled with license issues caused Lark to reduce its funding for
this program. Lark continues to work towards license issue resolution and
eventual potential sublicense agreements.
7
<PAGE>
RESULTS OF OPERATIONS
GROSS REVENUES. Gross revenues decreased by 3.3% from $1,242,849 to
$1,201,793 for the three-month periods ended March 31, 1999 and 2000,
respectively. This decrease in revenues was primarily caused by the two-week
disruption to operations during the relocation to the Company's new facility.
COSTS OF SERVICES. Costs of services consist primarily of labor and
laboratory supplies. Costs of services decreased 11% from $843,921 to $750,747
for the three-month periods ended March 31, 1999 and 2000, respectively. This
decrease was mainly due to the decrease in revenues and increased operating
efficiencies. Costs of services as a percentage of revenue were 67.9% and 62.5%
for the three-month periods ended March 31, 1999 and 2000, 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 22.6% from
$572,420 to $443,197 for the three-month periods ended March 31, 1999 and 2000,
respectively. The decrease was mainly due to the reduction of employees and
related expenses in these departments. Sales, general and administrative
expenses as a percentage of revenue were 46.1% and 36.9% for the three-month
periods ended March 31, 1999 and 2000, respectively.
RESEARCH AND DEVELOPMENT. Research and development costs decreased 100%
from $8,415 to $0 for the three-month periods ended March 31, 1999 and 2000,
respectively. The decrease in research and development costs was attributable to
the cancellation of sponsored research agreement project. Research and
development costs as a percentage of revenue were .7% and 0% for the three-month
periods ended March 31, 1999 and 2000, respectively.
VARIABILITY OF FUTURE OPERATING RESULTS. For the first quarter of 2000,
the Company continued the trend it started in 1999 toward a broader base of
customers and services. The Company improved its operating results in the first
quarter of 2000 compared to the same period in 1999. The improvement in
operating results for this quarter is especially significant considering the
earnings for first quarter of 2000 were negatively impacted by approximately
$62,000 of non recurring expenses associated with the move to its new
headquarters during January of 2000. The company continues to seek large
contracts and diversify its customer base.
LIQUIDITY AND CAPITAL RESOURCES. Operating cash flow was ($169,545) and
$647,734 for the three-month periods ended March 31, 1999 and 2000,
respectively. The positive operating cash flows for the quarter ending March 31,
2000 occurred primarily as a result of increased customer deposits and reduced
outstanding accounts receivable.
During the first quarter of 1999, the Company borrowed $22,000 from its
current bank under the terms of its advised discretionary credit line. See note
4 to financial statements for further details of the companies borrowing
facilities.
During the first quarter of 2000, the Company increased its line of credit
from $450,000 to $600,000 and extended the expiration date through December 31,
2000. In January of 2000, the Company paid off a term loan originally made in
July 1999 in the amount of $200,000. Then, on March 31, 2000, the Company
borrowed $75,000 under a second term loan payable in monthly installments and
maturing November 18, 2000.
MATERIAL COMMITMENTS. The Company currently has no outstanding material
commitments.
8
<PAGE>
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 March 31,
2000.
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.
9
<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 MAY 15, 2000 /S/ DOUGLAS B. WHEELER.
---------------- ----------------------------------
Douglas B. Wheeler
President and Chief Operating Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 828,361
<SECURITIES> 0
<RECEIVABLES> 736,710
<ALLOWANCES> (23,643)
<INVENTORY> 308,386
<CURRENT-ASSETS> 1,923,905
<PP&E> 2,591,027
<DEPRECIATION> (1,490,831)
<TOTAL-ASSETS> 3,054,491
<CURRENT-LIABILITIES> 2,020,727
<BONDS> 0
0
0
<COMMON> 3,464
<OTHER-SE> 911,141
<TOTAL-LIABILITY-AND-EQUITY> 3,054,491
<SALES> 1,201,793
<TOTAL-REVENUES> 1,201,793
<CGS> 750,747
<TOTAL-COSTS> 1,193,944
<OTHER-EXPENSES> (19,610)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,246
<INCOME-PRETAX> (11,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,761)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
