SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended: Commission File No.:
December 31, 1999 0-6421
SYNERGISTICS, INC.
Massachusetts 04-2283157
(State of Incorporation) (IRS Employer I.D.
Number)
9 Tech Circle, Natick, MA 01760
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number,
including area code (508) 655-1340
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $0.01 Par Value
(Title of Class)
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 (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes _X___ No ______
To the Company's knowledge, only a limited public market for it's securities
existed as of December 31, 1999 and there was no aggregate market value of
registrant's securities as of that date.
State issuer's revenues for its most recent fiscal year $2,837,235
Indicate the number of shares outstanding of each of the registrant's classes of
Common Stock, as of the last practical date.
Common Stock, $0.01 Par Value 9,632,561
(Title of Class) (Shares Outstanding at March 1, 2000)
Exhibit Index is located on pages 11 and 38 of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-QSB filed with the Commission by the Company for period ending
September 30, 1999.
PART I-FINANCIAL INFORMATION
ITEM 1. DESCRIPTION OF BUSINESS
(a) General Development of Business
Synergistics, Inc. a Massachusetts corporation (the "Company") organized on May
13, 1960 is located at 9 Tech Circle, Natick, Massachusetts 01760, telephone
(508) 655-1340. The Company's principal activity consists of manufacturing and
marketing access control systems, which it sells to banks, and other commercial
customers.
Current Products:
MSLR1 - ATM Vestibule Access Control: The MSLR1 product line continues to be a
substantial revenue producer for the Company. It is a minimal security access
control system utilizing a single reader and controller to control access to a
single door in an automatic teller machine (ATM) lobby installation. The
Company currently sells to over 30,000 bank installations worldwide.
ATM-III - ATM Vestibule Access Control: This product controls access to ATM
vestibule installations similar to the MSLR1 product. It offers high security
to the installations and has currently found a new market in banks located in
shopping malls.
ATM Access - ATM Vestibule Access Control: ATM Access is a distributed
processing access control system developed in 1994 to meet the requirements for
New York City's Local Law 70, a law passed to increase security in ATM
installations. The ATM Access system meets the requirements of the law by using
a database supplied to the banks by NYCE which provides reasonable assurance
that only bank card gain entrance to ATM vestibule installations. Today, there
are over 1,500 installations in and around New York City.
Citicorp ATM Access - ATM Vestibule Access Control: This product uses the ATM
Access product as a base controller for a customized, networked access control
system for all Citibank ATM installations in New York City. This product was
first shipped in 1998 and will be installed in 1999. It played a major part in
the sales increase in 1998.
PO-VAC - Post Office Lobby Access Control: This product is currently being sold
to the U.S. Post Offices of Connecticut to provide security to Post Office
lobbies which are to be open to the public 24 hours per day. No appreciable
numbers of the product have been sold in 1999. Post Office lobbies are
currently being renovated by the Postal Service to make provisions for PO-VAC
installations in 2000.
PC-PAC - Central Processing Access Control System: The PC-PAC system provides
alarm security and monitoring capability for complete facility management. It
has the capability of controlling 256 access controlled areas, supporting over
35,000 authorized persons, while providing monitoring capability for 1,600 alarm
points in the system. PC-PAC utilizes a desk top PC as a central processing
unit. It is available in a single computer version or with a redundant computer
running in hot standby. PC-PAC is currently being phased out of the product
line, to be replaced by WA-PAC for Windows.
WA-PAC - A DOS based distributed processing building management system: WA-PAC
is an access control system which supports a network of buildings or sites from
a Personal Computer, over dial-up or direct, voice grade, telephone lines or
fiber optics communications. WA-PAC operates as a distributed intelligent
network of card access readers and controllers which provide access control and
building security to buildings or groups of buildings. Each building can have up
to 64 card access readers and over 4,000 alarm and output points. It will
support databases of over 50,000 users. WA-PAC is currently being phased out of
the product line and has been replaced by WA-PAC for Windows NT.
WA-PAC FOR WINDOWS NT - A Windows NT based distributed processing building
management system: This product is a modern version of the DOS WA-PAC system
described above. WA-PAC for Windows NT was released for general distribution in
February, 1999. It is intended to be our premium building management and access
control product into the 21st century.
WA-PAC TRACKER - An asset tracking enhancement to WA-PAC for Windows NT. This
system protects against asset theft from buildings secured with WA-PAC access
control security. Assets are defined as any object or person that can be tagged
for identification with Tracker's long range proximity security tags. Assets
may be laptop computers or other equipment, babies, or even elderly persons.
Tagged assets are associated by the system with tagged personnel and recorded as
they pass through monitoring points. If the asset is unauthorized, an alarm is
sent to security and a record is made of the transaction. If the asset is
authorized to be carried by the tagged person, a record is made of it's passing.
Tracker is also sold as a standalone system without WA-PAC for Windows NT.
BUILDING WATCH - A DOS based, distributed processing, access control system:
Building Watch is an access control product designed for securing commercial or
industrial facilities at low cost. This system shares a personal computer with
other programs, thereby making it a very cost effective security system that is
easy to implement and expand. Building Watch offers direct local access control
and remote access management over dial-up phone lines. It also supports input
point monitoring and reporting capabilities. Building Watch supports all
popular card technologies. Building Watch has been phased out of the product
line and has been replaced with Building Watch for Windows.
BUILDING WATCH FOR WINDOWS - This access control system is a Windows 3.1 based
replacement for the DOS Building Watch system above. It supports access control
in an unlimited number of buildings and operates under Windows 3.1, 95 and NT
platforms. This product has been one of the top selling products for 1999.
DOOR WATCH - 2 Door, Stand alone, Full Featured Access Control System: This
product is sold mainly to small, industrial and commercial users who require
only one or two doors of access control, but wish to control doors with time
zones and keep a printed record of system activity. Door Watch supports all
popular card reader technologies.
SENTRY - Single door, stand-alone access control system, expandable to 2 doors.
Sentry was introduced in 1997 as a low end to our access control product line.
It is marketed to locksmiths due to it's simplicity and ease of installation.
The Company designs and manufactures all of its products. The Company's
computer based products use personal computers and standard peripherals to
provide access control and building management to secured sites. These products
are acquired from a variety of third party sources. Components are procured
from electronics distributors. Board and assembly houses manufacture and
assemble circuit boards used for the Company's products. Final assembly, test
and shipping functions are performed by Company personnel. The Company solicits
bids for components, subassemblies and outside assembly. The Company has not
experienced difficulty obtaining components for its products.
(b) Financial Information About Industry Segments
The Company has been in a single business segment for the past year: The
manufacturing and marketing of access control and facility management systems.
All of the Company's revenue, operating profit or loss and identifiable assets
are attributable to one industry segment.
(c) Narrative Description of Business
Y2K issues relating to products:
All listed products manufactured by the Company are currently Y2K compliant.
Products which were installed by users in the past are Y2K compliant or have a
proposed upgrade path to becoming Y2K compliant.
Description of Products
Bank ATM Access Control: The Company has been marketing bank ATM access
control products since 1977. These products consisted of MSLR1, ATM III, and
ATM Access. In 1998, the Company added a customized networked product expressly
customized for Citibank sites in Greater New York City. Bank ATM access control
revenue represented approximately 13% of all Company revenue in 1999, 32% in
1998 and 30% in 1997. The Company estimates having sold ATM access control
products to over 30,000 bank installations in the United States and abroad.
PC-PAC: PC-PAC, a central processing access control and building management
system was introduced in 1984. PC-PAC provides access control and building
security using a personal computer. PC-PAC controls up to 256 doors using a
variety of card reader technologies and keypads plus monitors perimeter alarm
points in secured building environments. PC-PAC provides hard disk storage for
permanent records of all transactions, an instantaneous check of personnel in a
given area and retains a record of those cards which have been used to attempt
access to an area where the cardholder was not authorized. Product options
include zoned anti-passback; alarm, elevator and relay control. PC-PAC revenue
approximated 1% of all Company revenue in 1999, 1% in 1998 and 1% 1997. The PC-
PAC system has been replaced with WA-PAC for Windows due to it's reduced
popularity due mainly to it's DOS operating system.
WA-PAC: The Company introduced WA-PAC in 1988 as a DOS based, distributed
processing access control system which controls multiple building sites through
the use of a single host computer. WA-PAC has been the Companies premier
computer system over the past years and is generally installed in Colleges and
Universities as well as large corporate buildings. WA-PAC supports a great
number of features and its reliable operation and reasonable pricing are the
main reasons for its success in controlling access and securing perimeters in
these buildings. WA-PAC uses either direct or dialup telephone lines for
communications and will support any number of building sites. Product shipments
began in 1988. WA-PAC revenue approximated 17% in 1999, 10% of total company
revenue in 1998, and 16% in 1997.
WA-PAC for Windows NT: The Company introduced WA-PAC for Windows NT in late
1998. In 1999, this Windows NT based product took the place of WA-PAC (DOS
version). WA-PAC for Windows NT is a networked product which will support WA-PAC
Tracker, video image badging, floor plan mapping and many other features which
were not possible with the DOS based WA-PAC system. The main market for this
product is colleges and universities, large corporate buildings and networks of
commercial buildings and warehouses. WA-PAC for Windows NT was first released
for sale in early 1999.
Building Watch for Windows: The Company developed and announced Building Watch
for Windows in 1997. Building Watch for Windows is an economical access control
product which controls access to 32 doors in many buildings from a single
computer which may be shared with other computer programs. Building Watch for
Windows revenues approximated 18% of all Company revenue in 1999, 12% in 1998
and 14% in 1997.
Door Watch: The Company announced Door Watch in December of 1992 and began
shipping the product in December of that year. Door Watch revenues approximated
1% of total Company revenue in 1999, 2% in 1998, and 1% in 1997.
The Company introduced and began selling Sentry in 1997. Sentry was not a
significant contributor to revenue in 1997. In 1999, Sentry contributed 0% of
total Company revenue, and 1% in 1998.
MARKETS
The primary market for the ATM access control product line is banks with
automatic teller machine (ATM) vestibules. The Company believes that its access
control and building management product lines are applicable to a wide variety
of commercial, government and institutional markets; i.e., military bases,
hospitals, colleges and universities, research and computer facilities, office
buildings, and office or manufacturing complexes.
RAW MATERIAL
The Company purchases components for its products from electronics distributors.
The Company designed printed circuit boards are purchased from board
manufacturers and outside assembly houses manufacture the completed printed
circuit boards. Final assembly, test and shipping as well as any customization
is performed by the Company. The Company is not dependent upon any one firm for
components or assembly work and duel sourcing is a company policy. The Company
solicits bids for its work and awards business based upon quality of
workmanship, price and lead time. The Company has not experienced difficulty
obtaining parts or outside assemblers for its products.
MARKETING AND CUSTOMERS
The company sells its products through the efforts of district sales managers
who market the product through independent security dealers and locksmiths world
wide. The Company markets its products primarily through trade shows,
advertising in selected industry journals and magazines, government supply
contracts, selected direct mailings, the Internet and supporting dealer bids and
proposals.
The Company continues to expand its base of distribution by increasing the
number of dealers authorized to sell the Company's products. The Company sells
direct to certain large banks and government agencies. The Company's business is
not seasonal in any material respect. The Company has no dependence upon a
single customer or a few customers.
PATENTS AND TRADEMARKS
The Company holds no patents on any of its current products.
WORKING CAPITAL ITEMS
Manufacturing cycle time approximates 1 to 2 weeks. The Company feels that this
is not unusual for a company that uses outside contractors for manufacturing and
assembly.
The Company provides a one year warranty after a product is shipped. Normal
payment terms are 30 days.
BACKLOG
The ending backlog was $38,589 in 1999, $54,237 in 1998, and $78,187 in 1997.
RESEARCH AND DEVELOPMENT
The Company expends monies on technical support , research and development of
new products, and the enhancement of existing products. Such expenditures are
consistent with the Company's overall product development, maintenance and
enhancement strategies. In 1997, a significant engineering effort was entered
into where development of new Windows based products occupied most of our
engineering effort. This effort continued through 1998 concluding with the
release of WA-PAC for Windows and a custom ATM access control system designed
exclusively for Citicorp and in 1999 when enhancements were added to both
products.
GOVERNMENT CONTRACTS
The Company does not actively pursue government contracts, but does have a GSA
contract and sells to the government whenever it is advantageous. Government
revenue approximated 1% of total revenue in 1999, 2% in 1998, and 3% in 1997.
None of the Company's sales under government contracts are subject to
renegotiations of profits or termination of contracts or subcontracts, to the
best of the Company's knowledge.
COMPETITORS
Over 150 companies compete in the card based access control marketplace. The
principle Company competitors include Cardkey Systems, Sensormatic,
Westinghouse, CASI-RUSCO, Corby Industries, and Northern Computers. The Company
believes its sales volume is a small fraction of the combined sales of the
Company's major competitors.
A competitor that chooses to devote substantial economic resources toward
acquiring a dominant position in the access control devices market might
seriously injure the Company's market position and jeopardize its viability, but
the product line has proven to be reliable and competitive over the years and
should survive this type of competition. The Company believes that competition
in our marketplace is based upon reliability, price, service, and product
capability. The Company believes that it can compete on such terms.
ENVIRONMENTAL MATTERS
The nature of the Company's manufacturing operation is such that no materials
are discharged into the environment. Under the terms of the Company's lease for
its operating facility, it is obligated for the normal maintenance and repair of
building systems. No additional capital expenditures are anticipated by
the Company.
PERSONNEL
At December 31, 1999, the Company had twenty five (25) full and part time
employees.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
REVENUE
The Company operates from a headquarters facility located in Natick,
Massachusetts and sales offices in Atlanta Georgia and Cleveland Ohio.
Export revenue approximated 14% of total revenue in 1999, 17% in 1998, and 20%
in 1997. The Company sells to American brokers doing business abroad and
directly to end users and foreign dealers. The currency used for all sales to
foreign firms is the U.S. Dollar.
ITEM 2. PROPERTIES
The Company currently leases approximately 7,160 square feet of office and
manufacturing space in a one story brick and masonry building located at 9 Tech
Circle, Natick, Massachusetts under the terms of a five year lease which expires
June 1, 2004. The current monthly base rate is $4,475. Additionally the
Company is required to pay utility charges and insurance costs as well as the
Company's portion of taxes and common space charges.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which the Company is a party or to
which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the security holders during the Fourth
Quarter of 1997.
ITEM 5. MARKET OF THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
As of December 31, 1999, to the Company's knowledge, only a limited public
market for its Common Stock existed. The Common Stock is not presently
registered on any stock exchange. The Company is not aware of any over-the-
counter trading in its stock in the past two years.
Prior to December 31, 1993, the Company had 656 stockholders of record of Common
Stock and 13 stockholders of Preferred Stock. Due to the Company's inability to
pay the required semiannual dividends, this Preferred Stock and the accumulated
unpaid dividends were converted to 1,367,040 shares of Common Stock.
Immediately after this conversion, additional shares of common stock were issued
to a principal shareholder and director in payment of certain demand notes and
accrued interest.
PART 11
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
1999 Compared to 1998
Revenues for 1999 were $2,837,235, a decrease of $80,557 compared with 1998.
Cost of Sales as a percentage of revenue increased to 65.17% from 58.16% and
selling expenses for 1999 increased by $11,231 when compared to 1998. The
increase in Cost of Sales was due to increased engineering wages and higher
material content on products sold. The increase in Sales & Marketing expenses
relate to the Company's development of new promotional materials and an
aggressive advertising campaign.
At December 31, 1999, current assets exceeded current liabilities by $612,837
including cash in commercial checking and money market accounts of $52,325.
1998 Compared to 1997
Revenues for 1998 were $2,917,792, an increase of $537,825 compared with 1997.
Cost of Sales as a percentage of revenue decreased to 58.16% from 70.17% and
selling expenses for 1998 increased by $77,209 when compared to 1997. The
decrease in Cost of Sales was due to reduced engineering and R&D spending. The
increase in Sales & Marketing expenses relate to the Company's development of
new promotional materials and an aggressive advertising campaign.
At December 31, 1998, current assets exceeded current liabilities by $693,521
including cash in commercial checking and money market accounts of $84,376.
1997 Compared to 1996
Revenues for 1997 were $2,379,967, an increase of $91,692 compared with 1996.
Cost of Sales as a percentage of revenue increased to 70.17% from 63.07% and
selling expenses for 1997 increased by $82,476 when compared to 1996. The
increase in Cost of Sales was due to aggressive engineering and R&D spending to
bring Windows into the product line. Increases in Sales & Marketing expenses
relate to the Company's development of new promotional materials , an aggressive
advertising campaign and the hiring of sales managers in various sections of the
U.S.
At December 31, 1997, current assets exceeded current liabilities by $446,373
including cash in commercial checking and money market accounts of $36,686.
LIQUIDITY AND CAPITAL RESOURCES
During 1999 no capital investments were necessary.
During 1998, the Company sold an additional 100,000 shares of common stock at
$1.00 per share to certain holders of common stock. Proceeds of this sale were
used to help fund R&D development of it's Windows product line and it's
customized ATM access system for Citicorp. No other capital requirements were
necessary.
During 1997, the Company sold an additional 160,000 shares of common stock at
$1.00 per share to certain holders of common stock. Proceeds of this sale were
used to fund R&D development of it's Windows product lines. No other capital
requirements were necessary.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements years ended Page Number
December 31, 1999 and 1998.
Independent Auditors' Report - March 14, 1999 1
Balance Sheets as of December 31, 1999 and 2
December 31, 1998
Statements of Operations for years ended 3
December 31, 1999 and 1998
Statements of Stockholders' Equity 4
for years ended December 31, 1999 and 1998
Statements of Cash Flows for years ended 5
December 31, 1999 and 1998
Notes to Financial Statements 6 - 11
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No Form 8-KSB has been filed within 24 months prior to the date of the most
recent financial statements reporting a change of accountants and/or reporting
disagreement on any matter of accounting principle or financial statement
disclosure.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTOR OTHER POSITION
NAME AGE SINCE WITH COMPANY
David S. Longworth 65 1981 President and Chief
Operations Officer
Robert Pogorelc 65 1997 Vice President and
Sales Manager
William M. Tetrick 84 1967 CEO and Chairman of the
Board
J. Thomas Gehman 53 1981 None
Lawrence A. Bishop 55 1984 None
James French 53 ---- Treasurer and Clerk
David S. Longworth, a Director, is President and Chief Operating Officer since
August, 1994. Prior to that he has served as Executive Vice President and has
provided various engineering and consulting services to the company since 1973
until joining the Company on a full time basis in 1984. Mr. Longworth was
manager of Compliance Engineering at Applicon, Inc. of Burlington,
Massachusetts, a Computer Aided Design Systems manufacturer since January 1983.
From 1973 to 1983, he was employed by Nixdorf Computer Corp. of Burlington,
Massachusetts, a computer manufacturer, as an electrical engineer.
William M. Tetrick, a Director, retired as President in August, 1994 but
remains Chief Executive Officer and Chairman of the Board of Directors of the
Company since December 1967.
Robert Pogorelc, a Director, was elected Vice President in 1994. He
joined the Company as Sales Manager in 1986 and currently is manager
of Sales and Marketing. Mr. Pogorelc was formerly New England District Manager
for Bristol Laboratories, Division of Bristol Myers; National Sales and
Marketing Manager of Irathane Systems, Director of Sales and Marketing for
Trancoa Chemical Corporation; Regional Sales Manager of Incon, Division of
Transitron, and Sales Manager of Apahouser.
J. Thomas Gehman, a Director, is currently vice president of Wolf Technology of
Framingham, MA. Mr. Gehman was Director of Engineering for Amnet, Inc. a
Watertown, Massachusetts computer network control systems manufacturer. Prior
to that, he was a design engineer with Applicon , Inc. from 1981 to 1983 and an
engineering manager at Nixdorf Computer from 1976-1981.
Lawrence A. Bishop, a Director, is Executive Vice President of Gray, Seifert &
Co., Inc., an investment and financial advisory firm, as well as a Director of
several privately held firms.
James French, Treasurer and Clerk. Mr. French has been employed at
Synergistics, Inc. since 1996 when he replaced the former Treasurer. He has
held positions as Treasurer and Clerk since 1997. Prior to that, he was
employed as Financial Manager, Accounting Manager and Manager of Internal
Auditing at various Massachusetts companies. Mr. French received his Masters
degree in Business Administration from Framingham State College in 1986.
During the past five years, none of the Company's Directors has been (1)
involved in any petition under the Bankruptcy Act or Bankruptcy Code or state
insolvency proceeding or any criminal proceeding, (2) the subject of any order,
judgment or decree enjoining him from engaging in or limiting his involvement in
any type of business practice, including securities related activities, or (3)
found by any court or the Securities and Exchange Commission to have violated
any securities law.
Item 10. MANAGEMENT REMUNERATION AND TRANSACTIONS
The following is a table of compensation paid to all executive officers and the
sales manager as a group:
CASH COMPENSATION TABLE (1999)
(A) Name of Individual (B) Capacities in which (C) Cash
or Number in Group Served Compensation
All executive officers (1) President and COO
and sales manager as a (2) Treasurer and Clerk
group (3 persons). (3) Vice President and
Sales Manager
$251,000
CERTAIN TRANSACTIONS
During 1999, the Company paid Mr. Tetrick approximately $34,470 for unpaid
expenses over the past twenty years. The debt is now cleared.
History: Wm. M. Tetrick
The Company and Mr. Tetrick entered into an agreement on December 31, 1981,
regarding payment of accrued compensation, which was amended on September 30,
1983 (the "Agreement"). The Agreement provided for repayment of $100,000 of
accrued salary to Mr. Tetrick prior to April 15, 1984, (2) an increase in Mr.
Tetrick's salary from $25,000 to $50,000 a year as of the date of the
amendment, and (3) repayment of remaining accrued compensation to Mr. Tetrick at
the rate of $50,000 per year. Pursuant to the Agreement, Mr. Tetrick converted
$116,000 of accrued salary owed him by the Company into 202,000 shares of Common
Stock. On December 1, 1984, Mr. Tetrick received payment of $88,529 of
accrued salary. Mr. Tetrick accrued his 1984 salary of $50,000. Beginning
January 1, 1985, Mr. Tetrick began drawing his annual salary on a weekly basis.
As of December 31, 1995, the Company had a note receivable from its former
Treasurer in the amount of $148,541.72 to reimburse the Company for certain
expenses incurred and to formalize various cash advances. No payment has been
made to satisfy payment of the note since the Treasurer left the Company in
1996. The note is receivable over ten (10) years with annual interest of 7.5%
and weekly payments of $150. The balance is due at the end of ten years and the
loan is secured by a second mortgage on the borrower's personal residence. As
collection of amounts outstanding on this note is questionable, a reserve has
been established for the full amount of the outstanding loan.
COMPENSATION PURSUANT TO PLANS
The following table sets forth for each officer who has received options, the
number of options granted under both the 1983 and 1988 stock plans, the year of
grant and the option price:
Year of Option Number
Name Grant Price of Shares
William M. Tetrick 1986 $2.75 12,034 Expired in 1996
David S. Longworth 1986 $2.50 7,776 Expired in 1996
William M. Tetrick 1987 $2.75 14,697 Expired in 1996
David S. Longworth 1987 $2.50 9,019 Expired in 1997
William M. Tetrick 1988 $1.10 74,000 Expired in 1996
David S. Longworth 1988 $1.00 20,000 Expired in 1998
David S. Longworth 1988 $2.50 9,805 Expired in 1998
David S. Longworth 1989 $2.50 10,417 Expired in 1999
David S. Longworth 1990 $2.50 10,822
William M. Tetrick 1991 $2.75 12,963 Expired in 1996
David S. Longworth 1991 $2.50 11,643
David S. Longworth 1995 $2.50 23,084
Robert Pogorelc 1995 $2.50 4,981
As of March 1, 2000, unexercised options for the purchase of an aggregate of
125,378 shares were held by all employees of the Company (including those held
by Officers and Directors).
No incentive stock option granted by the Company has included any tandem rights,
such as appreciation rights, nor has any incentive stock option granted by the
Company been exercised during 1999.
The Company has established a 401K plan for all employees.
During the year ended December 31, 1999, the Company had contributed $0 to that
plan.
OTHER COMPENSATION
The Company has no other plan or arrangement whereby any person will receive
remuneration upon the termination of his status as an employee, officer or
director of the Company. The Company had paid, as of March 1, 2000, no forms of
contingent compensation.
Other than the transactions described herein, there were no material
transactions during 1999 to which any of the following persons has a direct or
indirect interest: (1) any director or officer of the Company, (2) any nominee
for election as a director, (3) any person who, to the Company's knowledge, owns
5% or more of the Company's stock, or (4) any relative or spouse (or relative of
such spouse) of the foregoing persons.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the holdings of Common Stock by each person who,
as of December 31, 1999 held of record or was known by the Company to own
beneficially more that 5% of the outstanding Common Stock, by each director and
by all directors and officers as a group.
AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL COMMON STOCK
NAME AND ADDRESS OWNERSHIP (1)(9) OUTSTANDING
William M. Tetrick
2 Ridgeway Drive 423,577 (2)(3)(4) 4.40%
Wellesley Hills, MA
02181
David S. Longworth
65 School Street Ext. 45,549 (5) 0.47%
Natick, MA 01760
Robert L. Pogorelc 4,981 (6) 0.05%
J. Thomas Gehman
141 Marked Tree Road 2,000 0%
Needham, MA 02192
Lawrence Bishop
c/o Gray, Seifert & Co. Inc. 0 (7) 0%
380 Madison Avenue
New York, NY 10017
Legg Mason, Inc.
c/o Gray Seifert & Co., Inc.
380 Madison Ave.
New York, NY 10017 7,653,296 (8) 79.45%
All Directors and Officers
as a Group (10 persons) 476,107 4.94%
(1) Unless otherwise indicated in the following footnotes, ownership is both
beneficial and of record.
(2) Excludes 13,350 shares owned of record by Mr. Tetrick's wife and 4,840
shares owned by his son, Paul Tetrick, who resides with him, as to which he
disclaims beneficial ownership.
(3) Excludes 131,883 shares owned of record by Gary Cramer, Mr. Tetrick's son-
in-law; 3,200 shares owned by Gary and/or Margaret Cramer, Mr. Tetrick's
daughter, and 2,200 shares owned by the children of Mr. and Mrs. Cramer as to
which Mr. Tetrick disclaims beneficial ownership.
(4) Excludes 18,876 shares owned of record by other children and grand children
of Mr. Tetrick not already disclosed in points (2) and (3) above as to which Mr.
Tetrick disclaims beneficial ownership.
(5) Includes 45,549 shares of Common Stock acquirable on exercise of stock
options.
(6) Includes 4,981 shares of Common Stock acquirable on exercise of stock
options.
(7) Excludes 7,653,296 shares of Common Stock owned by customers of Legg Mason,
Inc., the parent company of Gray Seifert & Co., Inc. Through agreements with
such customers, Gray Seifert has discretionary power to vote these shares.
(8) Consists of shares of Common Stock owned by customers of Gray Seifert & Co.,
Inc., an affiliate of Legg Mason, Inc.; however, through agreements with these
customers, Gray Seifert has the discretionary power to vote and dispose of all
such shares.
(9) All options are considered non-dillutive since exercise price exceeds last
known market price.
ITEM 12. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following financial statements of Synergistics, Inc. are included in
Part II Item 7:
Index to Financial Statements years ended Page Number
December 31, 1999 and 1998
Independent Auditors' Report - March 14, 2000 1
Balance Sheets as of December 31, 1999 and 2
December 31, 1998
Statements of Operations for years ended 3
December 31, 1999 and 1998
Statements of Stockholders' Equity (Deficit) for 4
years ended December 31, 1999 and 1998
Statements of Cash Flows for years ended 5
December 31, 1999 and 1998
Notes to Financial Statements 6 - 11
(b) Exhibits
3.1 Articles of Organization and amendments thereto, as amended through
December 31, 1985 are incorporated by reference from Form 10-K for the year
ended December 31, 1982.
3.2 Amendment to Articles of Organization is incorporated by reference from
Form 10-K for the year ended December 31, 1987.
3.3 By-Laws, as amended, are incorporated by reference from Form 10-K for the
year ended December 31, 1982.
3.4 Amendment to Articles of Organization is incorporated by reference from
Form 10-K for the year ended December 31, 1988.
3.5 Amendment to Articles of Organization is incorporated by reference from
Form 10-K for the year ended December 31, 1990.
3.6 Amendment to Articles of Organization is incorporated by reference from
Form 10-K for the year ended December 31, 1991.
10.1 Sale of Imaging Assets is incorporated by reference from Form 10-KSB for
the year ended December 31, 1995.
10.2 Agreement with William M. Tetrick, dated December 30, 1981, is
incorporated by reference from Form 10-K for the year ended December 31, 1983.
10.3 Forms of Incentive Stock Option Plan of 1982 and Incentive Stock Option
Agreement are incorporated by reference from Form 10-Q for the period ended
March 31, 1983.
10.4 Forms of Incentive Stock Option Plan of 1983 and Incentive Stock Option
Agreement are incorporated by reference from Form 10-Q for the period ended
March 31, 1984.
10.5 Forms of Directors Stock Option Plan of 1987 and Directors Stock Option
Agreement are incorporated by reference from Form 10-K for the period ended
March 31, 1987.
27 Financial Data Schedule
Supplemental Information
The Company plans to furnish proxy materials and an Annual Report to
Stockholders to its stockholders subsequent to the date of this Form 10K, at
which time copies shall be furnished to the Commission.
SYNERGISTICS, INC.
By /S/ DAVID S. LONGWORTH_______
David S. Longworth
President and Chief Operations Officer
Date__3/30/00___________________________
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Synergistics, Inc. has caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
By/S/DAVID S. LONGWORTH___________________
David S. Longworth
President and Chief Operations Officer
In accordance with the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities indicated.
By/S/DAVID S. LONGWORTH___________________
David S. Longworth
President, COO and Director
Date_3/30/00____________________________
By/S/WILLIAM M> TETRICK___________________
William M. Tetrick
Director
Date_3/30/00 ___________________________
By/S/LAWRENCE BISHOP______________________
Lawrence Bishop
Director
Date_3/30/00 ___________________________
By/S/ J.THOMAS GEHMAN_____________________
J.Thomas Gehman
Director
Date_3/30/00 __________________________
By/S/ROBERT L. POGORELC___________________
Robert L. Pogorelc
Director
Date_3/30/00 ___________________________
SYNERGISTICS, INC.
NATICK, MASSACHUSETTS
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 1999 AND 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Synergistics, Inc.
Natick, Massachusetts
We have audited the accompanying balance sheets of Synergistics, Inc. as of
December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Synergistics, Inc. as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/S/LIVINGSTON & HAYNES, P.C.
LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts
February 29, 2000
- F1 -
SYNERGISTICS, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
CURRENT ASSETS
Cash and equivalents $ 52,325 $ 84,376
Trade accounts receivable, net of reserves of
$20,000 in 1999 and 1998 480,015 619,347
Inventories 377,344 333,382
Prepaid expenses 12,468 14,415
TOTAL CURRENT ASSETS 922,152 1,051,520
EQUIPMENT 166,964 152,227
Less depreciation and amortization 123,891 103,167
43,073 49,060
DEFERRED TAXES 759,674 759,674
$1,724,899 $1,860,254
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 218,080 $ 239,470
Accrued expenses and other current liabilities 91,235 84,059
Amounts due stockholder - 34,470
TOTAL CURRENT LIABILITIES 309,315 357,999
COMMITMENTS AND CONTINGENT LIABILITIES - -
STOCKHOLDERS' EQUITY
Common Stock (authorized 12,000,000 shares;
issued 9,632,561 shares in 1999 and 1998,
including 16,445 shares held in Treasury) 96,326 96,326
Additional paid-in capital 6,873,887 6,873,887
Retained earnings (deficit) (5,547,494) (5,460,823)
1,422,719 1,509,390
Cost of Common Stock held in Treasury (7,135) (7,135)
1,415,584 1,502,255
$1,724,899 $1,860,254
========== ==========
See accompanying notes to the financial statements.
- F2 -
SYNERGISTICS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
Revenues:
Sales - net $2,837,235 $2,917,792
Interest income 1,076 430
2,838,311 2,918,222
Costs and expenses:
Costs of sales 1,848,916 1,696,990
General and administrative expenses 432,961 407,932
Selling expenses 629,535 618,304
Bad debt expense 11,286 36,400
Interest expense 2,284 309
2,924,982 2,759,935
INCOME (LOSS) BEFORE INCOME TAXES (86,671) 158,287
Income taxes - deferred - 58,102
NET INCOME (LOSS) $ (86,671) $ 100,185
========== ==========
INCOME (LOSS) PER COMMON SHARE $ (.009) $ 0.010
======= =======
See accompanying notes to the financial statements.
- F3 -
SYNERGISTICS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
COMMON STOCK
SHARES AMOUNT
Balances at January 1, 1998 9,557,561 $95,576
Net income - -
Settlement of note for Common Stock (25,000) (250)
Proceeds from issuance of Common Stock 100,000 1,000
Balances at December 31, 1998 9,632,561 96,326
Net loss - -
BALANCES AT DECEMBER 31, 1999 9,632,561 $96,326
========= =======
See accompanying notes to the financial statements.
ADDITIONAL RETAINED
PAID-IN EARNINGS TREASURY STOCK
CAPITAL (DEFICIT) SHARES AMOUNT TOTAL
$6,799,637 $(5,561,008) 16,445 $ 7,135 $ 1,327,070
- 100,185 - - 100,185
(24,750) - - - (25,000)
99,000 - - - 100,000
6,873,887 (5,460,823) 16,445 7,135 1,502,255
- (86,671) - - (86,671)
$6,873,887 $(5,547,494) 16,445 $ 7,135 $ 1,415,584
========== =========== ======= ======= ===========
- F4 -
SYNERGISTICS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
Cash flows from operating activities:
Net income (loss) $ (86,671) $ 100,185
Adjustments to reconcile net income (loss)
to net cash (used) by operating activities:
Deferred taxes - 58,102
Depreciation and amortization 20,724 23,900
(Increase) decrease in assets:
Trade accounts receivable 139,332 (134,665)
Inventories (43,962) 1,706
Prepaid expenses and other current assets 1,947 611
Increase (decrease) liabilities:
Trade accounts payable (21,390) (67,563)
Accrued expenses and other current
liabilities 7,176 27,280
Amounts due stockholder (34,470) (51,827)
TOTAL ADJUSTMENTS 69,357 (142,456)
NET CASH (USED) BY OPERATING ACTIVITIES (17,314) (42,271)
Cash flows from investing activities:
Capital expenditures (14,737) (10,039)
NET CASH (USED) BY INVESTING ACTIVITIES (14,737) (10,039)
Cash flows from financing activities:
Proceeds of stock issuance - 100,000
NET CASH PROVIDED BY FINANCING ACTIVITIES - 100,000
NET CHANGE IN CASH (32,051) 47,690
Cash and equivalents at beginning of year 84,376 36,686
CASH AND EQUIVALENTS AT END OF YEAR $ 52,325 $ 84,376
========= =========
Cash paid for:
Interest $ 2,284 $ 309
Income taxes $ - $ -
Non-cash transactions:
In 1998, 25,000 shares of the Company's Common Stock was received in
settlement of a $25,000 note from a director.
See accompanying notes to the financial statements.
- F5 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied by management
of the Company in the preparation of the accompanying financial statements
follows.
Nature of Operations
Synergistics, Inc. is engaged in the manufacturing and marketing of
card access systems, which are sold to banks and other commercial customers.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Equivalents
Cash and equivalents consist of cash on hand, demand deposits with
commercial banks, and money market securities with initial maturities of less
than 90 days.
Inventories
Inventories are stated at the lower of first-in, first-out cost or
aggregate market.
Equipment
Equipment is stated at cost. Normal maintenance and repair costs are
expensed as incurred. Gains and losses on sales or retirements are included in
operations. Depreciation and amortization are provided using straight-line and
accelerated methods over the estimated useful lives of the assets (5-12 years).
Common Stock Held in Treasury
When Common Stock held in Treasury is issued, Common Stock held in
Treasury is credited for the average cost of the issued securities.
Revenue
The company recognizes revenue from sales at the time products are
shipped to customers.
- F6 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
Advertising Costs
The Company expenses advertising costs as incurred.
Sales Commissions
The Company pays sales commissions to various agents only upon the
collection of the accounts receivable generated by the sales. The Company
accounts for these sales commissions at the time products are shipped to
customers.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes", which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based upon the difference between the financial statement and tax
basis of assets. Tax benefits arising from the utilization of carryforward net
operating losses, investment and research and development tax credits are
valued based upon the expected future benefit to be recognized. (Refer to
Note H)
Income Per Share of Common Stock
The weighted average number of shares of Common Stock outstanding used
in computing income per share does not include the effect of the conversion of
the stock options as the exercise price exceeds the current market value of the
security. (Refer to Note E)
Stock Options
The Company accounts for its incentive stock option plans in accordance
with APB No. 25 and does not recognize an expense when options are issued with
an exercise price in excess of market. Currently there is no public market for
this stock and estimates of future value as required by FASB 123 cannot
reasonably be determined.
NOTE B - INVENTORIES
Inventories consist of the following at December 31, 1999 and 1998:
1999 1998
Finished goods and work-in-process
at aggregate market $327,184 $289,066
Raw materials 50,160 44,316
$377,344 $333,382
======== ========
- F7 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE C - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following
at December 31, 1999 and 1998:
1999 1998
Accrued compensation and benefits $34,186 $30,396
Accrued commissions 29,540 34,962
Accrued professional fees 20,000 17,500
Other 7,509 1,201
$91,235 $84,059
======= =======
NOTE D - AMOUNTS DUE STOCKHOLDER
Amounts due stockholder consist of the following at December 31, 1999
and 1998:
1999 1998
Amount due stockholder for costs
and expenses incurred by majority
stockholder on Company's behalf; payable,
without interest, on demand $ - $ 34,470
$ - $ 34,470
======== ========
NOTE E - STOCKHOLDERS' EQUITY
Common Stock
At December 31, 1999, the Company is authorized to issue 12,000,000
shares of $.01 par value Common Stock. At December 31, 1999, 9,632,561 shares
of such stock had been issued, including 16,445 shares held in the form of
Treasury Stock and 850,000 shares were reserved for issuance in connection with
the stock option plans discussed below.
- F8 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE E - STOCKHOLDERS' EQUITY (Continued)
Stock Option Plans
The Company has three qualified incentive stock option plans (the "1983
Plan", the "1987 Plan" and the "1988 Plan"), which have been approved by the
Company's stockholders. The 1983 and 1987 Plans provide that options can be
granted for the purchase of 275,000 shares of Common Stock each through June
1993 and June 1998, respectively, with the options expiring ten years from the
date they are granted, except for options issued to holders of more than ten
percent of the Company's Common Stock, which expire five years from the date
they are granted. Options previously granted under a 1982 Plan expired and were
reissued under the 1983 Plan. The 1988 Plan provides that options can be
granted for the purchase of 350,000 shares of Common Stock through 1998 under
terms similar to the 1983 Plan.
All plans provide that options can be exercised for a value (per
share), as stated by the Company's Board of Directors, as of the date the option
was granted, except for options granted to holders of more than ten percent of
the Company's Common Stock which are exercisable at 110 percent of such stated
value.
Transactions regarding the options during the years ended December 31,
1999 and 1998 are shown as follows;
1983 Plan 1987 Plan 1988 Plan
Outstanding at January 1, 1998 34,339 20,000 128,536
Grants expired during 1998 (21,000) (20,000) (16,238)
Grants forfeited during 1998 - - (259)
Outstanding at December 31, 1998 13,339 - 112,039
Grants expired during 1999 (12,666) - (10,417)
Grants forfeited during 1999 - - -
Outstanding at December 31, 1999 673 - 101,622
======= ======= =======
All outstanding options are exercisable at $2.50 per share.
Income Per Share of Common Stock
Income per share of Common Stock is computed based on the weighted
average number of shares of Common Stock outstanding (9,632,561 shares for the
years ended December 31, 1999 and 1998).
- F9 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE F - CONCENTRATION OF RISK
From time to time, the Company maintains deposits with major financial
institutions in excess of insurable limits.
NOTE G - RENT AND OPERATING LEASE COMMITMENT
The Company's rent expense during the years ended December 31, 1999 and
1998 approximated $66,147 and $60,062, respectively, principally under the terms
of a lease for its operating facility.
During March 1999, the Company extended the lease agreement for its
current occupation of the premises for a period of five years. The lease
provides that the Company is responsible for fifty percent of the real estate
taxes and operating costs of the premises. Future rental payments required
under the lease, exclusive of real estate taxes and operating costs, are as
follows:
Year Ending December 31,
2000 $ 55,488
2001 59,070
2002 62,652
2003 66,228
2004 34,008
NOTE H - INCOME TAXES
At December 31, 1999, operating loss carryforwards aggregating
approximately $5,300,000 are available to reduce future federal taxable income,
if any. If not utilized, these carryforwards will expire at various dates
between 2000 and 2009. The carryforwards are subject to examination by the
Internal Revenue Service.
The net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes are reflected in deferred income taxes.
As of December 31,1999 and 1998, the Company's deferred tax asset consists of:
1999 1998
Net operating loss carryforwards $2,002,580 $1,920,709
Other 66,000 66,000
Valuation allowance (1,308,906) (1,227,035)
$ 759,674 $ 759,674
========== ==========
- F10 -
SYNERGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE I - BUSINESS SEGMENT INFORMATION
The Company's business, which consists principally of a single segment,
is the designing, manufacturing and selling of single and multifunctional
electronic systems which control access to secure areas. The Company sells to
domestic and foreign customers from its domestic location.
Sales by Major Customer Category 1999 1998
Government sales $ 17,514 $ 71,744
Other domestic sales 2,409,342 2,345,173
Export sales 410,379 500,875
$2,837,235 $2,917,792
========== ==========
Export sales are made directly and through United States brokers to
users in Canada, South and Central America to include Mexico, the Middle East
including Turkey, and the South Pacific and Far East. No single foreign or
domestic area accounts for more than ten percent of total sales in 1999.
NOTE J - CONTINGENT SALE OF ASSETS
The Company has negotiated a settlement of the contingent sale of
assets related to its imaging product, calling for payments of $50,000 in 1998,
which have been received, $14,000 per year in 1999, which have been received,
and $14,000 per year in 2000, and 2001. Income is being recognized as received.
NOTE K - NOTE RECEIVABLE - DIRECTOR
The Company repurchased 25,000 shares of Common Stock from a director
in exchange for the director's note to the Company.
NOTE L - ADVERTISING COSTS
Advertising expense was $90,447 and $84,947, respectively, for the
years ended December 31, 1999 and 1998.
NOTE M - DEFERRED COMPENSATION PLAN
The Company has a deferred compensation plan under Section 401(k)
covering substantially all employees. The Company provided no match during
1999 and $6,000 during 1998.
- F11 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 52,325
<SECURITIES> 0
<RECEIVABLES> 500,015
<ALLOWANCES> 20,000
<INVENTORY> 377,344
<CURRENT-ASSETS> 922,152
<PP&E> 166,964
<DEPRECIATION> 123,891
<TOTAL-ASSETS> 1,724,899
<CURRENT-LIABILITIES> 309,315
<BONDS> 0
0
0
<COMMON> 96,326
<OTHER-SE> 1,319,258
<TOTAL-LIABILITY-AND-EQUITY> 1,724,899
<SALES> 2,837,235
<TOTAL-REVENUES> 2,837,235
<CGS> 1,848,916
<TOTAL-COSTS> 1,848,916
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 11,286
<INTEREST-EXPENSE> 2,284
<INCOME-PRETAX> (86,671)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86,671)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,671)
<EPS-BASIC> (0.009)
<EPS-DILUTED> (0.009)
</TABLE>
