US SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998.
Commission File Number: 0-27382.
SC&T International, Inc.
----------------------------------------------------------
(Exact name of small business as specified in its charter)
Arizona 86-0737579
- ------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification)
incorporation or organization)
15695 North 83rd Way, Scottsdale, Arizona 85260
-----------------------------------------------
(Address of principal executive offices)
(602) 368-9490
----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity as of September 10, 1998, latest practicable date: 24,553,684
shares of Common Stock, par value $0.01 per share.
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
1
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
Page
Part I Financial Information
Item 1 Financial Information
Consolidated Balance Sheet as of July 31,1998 3
Consolidated Statements of Operations for the Three Months
Ended July 31,1998 and July 31,1997 5
Consolidated Statement of Shareholders' Equity for the Three
Months Ended July 31,1998 6
Consolidated Statements of Cash Flows for the Three Months
Ended July 31,1998 and July 31, 1997 7
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis 10
Part II Other Information
Item 1 Litigation 14
Item 2 Change in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security-Holders 15
Item 5 Other Information 15
Item 6 Exhibits & Reports on Form 8-K 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
July 31,1998
ASSETS
Current assets:
Cash $ 13,528
Receivables 1,249,381
Inventory 1,741,215
Other current assets 178,385
----------
Total current assets 3,182,509
Product development costs, less accumulated amortization of $
Property and equipment, less accumulated depreciation of $ 728,265
Other assets 152,989
----------
$4,063,763
==========
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
July 31,1998
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,250,001
Common stock payable 103,130
Advances From Factor 409,608
Accrued expenses 297,766
-----------
Total current liabilities 2,060,505
Long term liabilities - Deferred Income-Long Term 187,646
Shareholders' equity:
Common stock, $0.01 par; authorized 25,000,000 shares;
23,135,263 shares issued and 22,935,263 shares
outstanding 231,536
Series A preferred stock, $0.01 par; authorized 5,000,000
shares; 153 shares issued and outstanding 2
Series B preferred stock, $100,000 Stated Value, 15 shares
issued and outstanding 1,500,000
Additional paid-in capital 13,280,028
Currency translation 58,782
Accumulated deficit (13,254,736)
------------
Total shareholders' equity 1,815,612
------------
$ 4,063,763
============
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended July 31, 1998 and 1997
1998 1997
------------- ------------
Net sales $ 1,079,982 $ 1,178,685
Cost of goods sold 950,840 1,266,824
------------ ------------
Gross profit 129,142 (88,139)
Selling, general and administrative expenses:
Payroll and payroll taxes 325,464 517,687
Selling and promotion 215,535 757,065
Office and administrative 352,375 573,282
Research and development 21,952 55,623
Consulting fees 427 106,580
Other 133,603 157,958
------------ ------------
1,049,356 2,168,195
------------ ------------
Loss from operations (920,214) (2,256,334)
Other income (expense):
Interest income 3,720 39,177
Interest expense (595) 30,968
------------ ------------
Loss before income tax (917,089) (2,186,189)
Income tax expense -- --
------------ ------------
Net loss $ (917,089) $ (2,186,189)
============ ============
Net loss from operations per common share $ (0.04) $ (0.08)
============ ============
Net loss per common share $ (0.04) $ (0.08)
============ ============
Weighted average common shares outstanding 23,568,516 23,135,273
============ ============
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Three Months Ended July 31,1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional Treasury Stock
------------ --------------- paid-in -------------- Currency Accumulated
Shares Amount Shares Amount capital Shares Amount translation deficit
---------- -------- ------- ---------- ----------- ------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30,1998 23,153,684 $231,538 188 $1,500,002 $13,280,028 $ $ $(12,146,254)
Prior period inventory valuation
adjustment (191,393)
Preferred stock issuance costs -- -- -- -- -- -- -- -- --
Issuance of common stock -- -- -- -- -- -- -- -- --
Preferred stock conversion -- -- -- -- -- -- -- -- --
Currency translation -- -- -- -- -- -- -- 58,782 --
Net loss -- -- -- -- -- -- -- -- (917,089)
---------- -------- ----- ---------- ----------- ------ -------- ------------ ------------
Balance at July 31,1998 23,153,684 $231,536 188 $1,500,002 $13,280,028 $ $ 58,782 $(13,254,736)
========== ======== ===== ========== =========== ====== ======== ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended July 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(917,089) $(2,186,189)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 156,797 430,828
(Increase) decrease in accounts receivable (507,672) 929,207
Decrease in allowance for doubtful accounts -- --
(Increase )decrease in inventories 306,424 867,651
(Increase) decrease in advances on purchases of
inventory --
(Increase)decrease in other current assets (42,348) (157,383)
Consigned Inventory 187,646 --
Increase in prepaid expenses 11,800 --
Increase in other assets -- (27,632)
Increase (Decrease) in accounts payable (74,570) (28,612)
Increase (Decrease) in accrued expenses (253,166) 178,976
--------- -----------
Net cash used in operating activities (215,089) 2,193,035
--------- -----------
Cash flows from investing activities:
Purchase of property and equipment -- (29,666)
Development costs --
Loans to related parties --
--------- -----------
Net cash used in investing activities (29,666)
--------- -----------
Cash flows from financing activities:
Currency translation 58,782
Net borrowings under line of credit agreement --
Principal payments on short-term debt --
Principal payments on long-term debt --
Proceeds from note payable, related party -- --
Net repayments on related party loans --
Net borrowings on notes payable, bank -- --
Preferred stock issuance costs --
Change in advances from factor 225,364
--------- -----------
Net cash (used in)provided by financing activities 284,146 --
--------- -----------
Net (decrease)increase in cash (848,032) (22,820)
Cash, beginning of period 861,560 1,890,694
--------- -----------
Cash, end of period $ 13,528 $ 1,867,874
========= ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
1. Interim financial reporting:
The accompanying unaudited Consolidated Financial Statements for SC&T
International, Inc. (the "Company") have been prepared in accordance with the
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations, and cash flows for the periods
presented have been made. The results of operations for the three month period
ended July 31,1998 is not necessarily indicative of the operating results that
may be expected for the entire fiscal year ending April 30,1999.
Reclassification:
Certain prior period amounts have been reclassified to conform to the
current period presentation.
2.. Common Stock:
On October 22, 1997, the Company's shares of common stock, which was traded
under the symbol SCTI, were delisted from the Nasdaq Small cap market. This
action was taken as a direct result of the Company's failure to meet the filing
requirement as stated in marketplace Rule 4310(c)(14). The failure to meet the
filing requirement was the result of the untimely resignation of the Company's
accounting firm, Toback & Company. The Company has complied with all reporting
requirements in a timely manner since retaining Evers & Company in October,
1997. The company has completed and filed its 10K report for the year ended
April 30,1998.
The company has entered into agreements with the holders of 98% of the Series A
Preferred Stock hereby all of their shares of Series A Preferred Stock are
tendered for conversion at a fixed conversion price of $1.00 per share ( the
"Fixed Conversion "). The holders of Series A Preferred Stock waive all other
conversion rights which they may have pursuant to any agreement. In addition to
the fixed conversion price, the holders of the Series A Preferred Stock will
also receive warrants to purchase one-third of the number of shares which they
receive pursuant to the Fixed Conversion price at a price of $1.75 per share
subject to ordinary anti-dilution provisions ( the "Warrant Shares"). The
Company did not have an adequate number of authorized shares to cover the
warrants, employee stock options and the remaining preferred shareholders. In
order to allow the Company to have sufficient shares for these transactions, the
President of the Company returned 1,648,444 of his shares to the Company.
Subsequent to year end, the Board of Directors approved the issuance of 15
shares of Series B Preferred Stock at $100,000 stated value per share to the
President in exchange for 1,500,000 shares of common stock returned. The
preferred shares are convertible into common stock at the rate of 12 shares for
8
<PAGE>
SC&T INTERNATIONAL, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
every $1 of face value of the Series B Preferred stock. In addition, the
President received $150,000 in cash for the additional 148,444 shares returned.
The transaction has been retroactively applied to the 1998 financial statements.
3. Proxy Approval
In July, 1998 shareholders of the Company approved two motions. The first, to
increase the number of authorized shares by 50,000,000 bringing the total to
75,000,000. The second motion approved was to authorize a reverse split.
Management's current intent is not to reverse the stock until the Company' share
price has increased and the Company reaches profitability. At this time the
Company has not set a date for a reverse split, but does not expect a reverse
split until early in calendar year or until such time as the common share value
has improved.
4. Commitments and Contingencies
Operating leases:
In October 1996, the Company purchased approximately 1.24 acres of land
located at the Scottsdale Airpark in Scottsdale, Arizona. The Company completed
construction of approximately 12,000 square feet of warehouse space and
approximately 6,000 square feet of executive office space in April 1997. The
Company has subsequently sold the building on June 30, 1997 and effective July
1, 1997 leased the building back from the buyer.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The statements contained in this report on form 10SB that are not
purely historical are forward-looking statements within the meaning of the
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act
of 1934, including statements regarding the Company's "expectations,"
"anticipation," "intentions," "beliefs," or "strategies," regarding the future.
Forward-looking statements include statements regarding revenue, margins,
expenses and earnings analysis for the remainder of the fiscal year 1999 and
thereafter; future products or product development strategy; and liquidity and
anticipated cash needs and availability. All forward looking statements included
in this document are based on information available to the Company on the date
of this report, and the Company assumes no obligation to update any such
forward-looking statement. It is important to note that the Company's actual
results could differ materially from those in such forward-looking statements.
Overview
SC&T International, Inc. (the "Company") was formed in June 1993. The
Company develops and markets accessory and peripheral products for the computer
and video game industries under its PLATINUM SOUND and PER4MER registered
trademarks.. The Company's products include sub-woofer and speaker sound
enhancement systems, PC volume controllers, and a line of PC and video arcade
racing wheels for SEGA, Nintendo, Sony Playstation and IBM-PC's. The Company's
multimedia keyboards line has been discontinued, in favor of a second generation
product targeted at the corporate market. This second generation, featuring an
enhanced Voice Recognition product, has been completed but at this time has not
been introduced into the market.
On December 31, 1994, the Company purchased SC&T Europe, a marketing
and distribution company located in Antwerp, Belgium. The Company, in an effort
to reduce its European operating costs, consolidated its European distribution
operations into one central facility located in the United Kingdom, in May 1997.
The Company formed SC&T Europe Limited, located in Portsmouth England. The
Belgium office was closed in August, 1998. All current marketing and
distribution operations, including a United Kingdom domestic sales force, is now
being handled out of the United Kingdom operations.
Despite the expansion in the number of customers and the corresponding
increase in revenue since commencing operations, the Company's total operating
expenses have exceeded revenue, resulting in a net loss of approximately
$917,000 for the three months ended July 31,1998. The Company's primary costs
are for research and development, tooling for new products, inventory, trade
shows, and selling and promotion activities. Although these expenses were kept
to a minimum during the quarter, the Company expects these costs to increase at
a reduced rate when compared to the expected rate of increase in sales. In
addition, operating results may be influenced by factors such as the demand for
the Company's products, the timing of new product introductions by both the
Company and its competitors, pricing by both the Company and its competitors,
inventory levels, the Company's ability to develop and market new products, the
Company's ability to manufacture its products at high quality levels and at
commercially reasonable costs, the timing and levels of sales and marketing
expenditures, and general economic conditions.
10
<PAGE>
Operating results of the Company for the three month period ended July 31,1998
and 1997.
Net Sales
Net sales for the three months ended July 31,1998 decreased to
approximately $1,079,000 or approximately $99,000 less than net sales for the
three months ended July 31,1997. The net change in sales was approximately 8%.
Gross Profit
The Company's gross profit percentage for the three months ended July
31,1998 before special inventory adjustments was approximately 25%. The
Company's cost of sales includes inventory write-downs, returns and special
adjustments. The Company charged operations over $400,000 for the period ended
July 31,1997. Gross profit for the period before inventory write downs was 26%.
Gross profit margins are affected by several factors, including the product mix
between the Company's products. Typically, products sell at gross profit margins
ranging from 20% to 40%. The Company anticipates that new products will
initially sell at higher gross profit margins. However, there can be no
assurance that higher margins will be maintained over the life of the product.
Payroll and Payroll Taxes
The Company's payroll and payroll tax expense decreased from
approximately $517,000 in the three months ended July 31,1997 to approximately
$325,000 for the three months ended July 13,1998, or approximately 37%.
Substantial cost reductions were made in executive salaries, relocation costs
and employment expenses for advertising and fees.
Selling and Promotion
The Company's selling and promotion expenses decreased from
approximately $757,000 for the three months ended July 31,1997 to approximately
$215,000 for the three months ended July 31,1998, or a decrease of approximately
71%. This represents an decrease in selling and promotion expenses, as a
percentage of sales from 64% for the three months ended July 31,1997 to 20% for
the three months ended July 31,1998. Approximately one-third of the decrease was
due to a reduction in expenses for packaging new products, decreased trade show
expenses and discontinuance of sponsorship expenses of Kool Toyota Racing
Series.
11
<PAGE>
Office and Administration
The Company's office and administrative expenses decreased from
approximately $573,000 for the three months ended July 31,1997 to approximately
$352,000 for the three months ended July 31,1998, or approximately 39%. As a
percentage of net sales, office and administrative expenses decreased from 48%
to 32%. Major cost reductions were made in legal expense $193,000 and general
office overhead expenses $28,000.
Development Cost Amortization
Development cost amortization decreased from approximately $55,000 for
the three months ended July 31, 1997 to approximately $21,000 for the three
month period ended July 31, 1998. Development cost amortization represents
amortization of costs associated with development of new products. Such costs
are amortized over a 12 month period commencing with the first sale of the
product.
Consulting Fees
Expenditure for consulting fees decreased from approximately $106,000
for the three months ended July 31, 1997 to less than $1,000 for the three
months ended July 31,1998. Most of the consulting fees for 1997 were in
conjunction with the conversion of Series A preferred stock to common stock.
Net Loss
As a result of the factors described above, the Company's loss from
operations decreased from approximately $2,186,000 for the three months ended
July 31,1997 to approximately $917,000 for the three months ended July 31,1998.
The operating results for the period ended July 31,1997 include extraordinary
expenses recorded in June, 1997 which was formerly the fiscal year end.
Net Loss Per Share
Net loss per share from operations decreased from $0.08 for the three
months ended July 31,1997 to $0.04 for the three months ended July 31,1998.
Liquidity and Capital Resources
As a result of the Company's initial public offering, and its private
placement of Series A Preferred Stock in June 1996, the Company's working
capital improved to approximately $3,635,084 at September 30, 1997. The Company
is required to pay the costs of stocking inventory before the Company receives
orders and payment from its customers. Typically, the Company's customers do not
pay the Company for its products until approximately 60 days following delivery
and billing. As a result, the receipt of cash from operations typically lags
substantially behind the payment of the costs for purchase and delivery of the
Company's products.
12
<PAGE>
Through July 1996, the Company financed operations by factoring its
United States receivables. Historically, the Company's European subsidiary
financed operations through a line of credit of approximately $182,000
denominated in Belgian francs. In addition, to raise funds to meet its expenses,
the Company obtained inventory financing in April and May 1995 for an aggregate
of $1,000,000, completed a private placement in April 1995 of $1,500,000 for
2,000,000 shares of Common Stock, completed a private placement in September
1995 of $875,000 of 8% Subordinated Debentures. In December 1995, the Company
used approximately $1,875,000 of the $4,500,000 gross proceeds of its initial
public offering to repay the inventory financing and the 8% Subordinated
Debentures. In June 1996 the Company received gross proceeds of $10,510,000 for
an issuance of 1,051 shares of Series A Preferred Stock. The preferred
shareholders earn 8% accretion per annum up to the date of conversion.
Business Outlook and Risk Factors
Management believes there is a growing acceptance in the global marketplace for
the Company's expanding product line. SC&T products are currently sold in over
25 countries worldwide. The Company plans four to six new product introductions
over the next six months. The Company has developed new manufacturing alliances
which have reduced costs due to economies of scale production environments. The
Company's total revenue and product mix could be materially and adversely
affected by many factors, some of which are beyond the control of the Company.
Those factors include, but are not limited to, turnover in the Company's sales
force, competition from existing or new products, production delays, the
Company's ability to penetrate new markets and attract new customers, unexpected
postponement or cancellation of significant orders, lack of market acceptance of
the Company's products, manufacturing defects and seasonality of sales and
general economic conditions.
Business Outlook and Risk Factors, Continued
The Company believes the accessory and peripheral products markets for the
personal computer and video gaming industries has a strong outlook. These
markets are characterized by sales growth, rapid technological change, frequent
introduction of new products, product upgrades and evolving industry standards.
The Company strives to provide market-leading solutions that address the
personal computer user interested in upgrading existing equipment. Due to the
risk factors discussed and to other factors that generally affect high
technology companies, there can be no assurance that the Company will be able to
successfully penetrate these markets in the future.
The Company's 10K report for the year ended April 30,1998 contained a going
concern qualification. The Company does not dispute this qualification. Without
a substantial increase in revenues the Company will require additional working
capital through external sources to continue to fund its operations. Management
plans to actively explore debt and equity financing as well as holding
discussions with potential merging partners to obtain required financing.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM I. LITIGATION
Pending or Threatened Litigation
A. Home Arcade v SC&T
In 1997, Home Arcade filed suit for breach of a license agreement, a suit which
alleges bad faith and fraud claims. The compliant seeks damages in excess of
$900,000, however, the principal amounts are far less. The requested relief
includes trebling and punitive damages. Management has positively evaluated the
issues of breech and vigorously disputes the principal amount. Management
intends to vigorously defend the case. Further, management is in the process of
filing counterclaims alleging that SC&T, among other things, actually incurred
significant losses as a result of Home Arcade's misrepresentations and breach of
the licensing agreement. The litigation is pending in Santa Clara County, San
Jose, California. It is expected to last approximately two years.
B. SC&T V. Brian Johnson
In 1998 SC&T filed suit against a former sales person for recovery of moving
expenses pursuant to the moving expense agreement. These expenses became due
when Mr. Johnson resigned prior to one year from the agreement. SC&T , also,
alleges that Mr. Johnson submitted fraudulent reimbursement vouchers. Mr.
Johnson filed a counterclaim alleging he did not receive full compensation
during his tenure. Management has evaluated the claims and intends to vigorously
prosecute its claims against Mr. Johnson and expects a positive judgment within
one to one and one half years.
C. Jack of All Games v. SC&T
In June, 1997 Jack of All Games Entertainment, Inc., sued the Company in
Hamilton County, Ohio for breach of contract regarding the purchase of 5,000
steering wheel accessories. Jack of All Games is seeking approximately $180,000
in damages. Plaintiff claims the steering wheels it received were not
merchantable for the purpose for which they were intended The Company has
answered the compliant and denied all material allegations. It is anticipated
that the litigation of these issues will be concluded within one year.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
14
<PAGE>
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY-HOLDERS
In July, 1998 Shareholders approved a motion to issue an additional 50,000,000
common stock from 25,000,000 to 75,000,000 and to allow the Company to reverse
common stock outstanding at a time deemed necessary by the Board of Directors.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
On June 17,1998 the registrant filed with the Securities Exchange Commission to
change its fiscal year from March 31 to April 30.
15
<PAGE>
SIGNATURES
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated.
Signature Capacity Date
--------- -------- ----
SC&T INTERNATIONAL, INC.
/s/ James L. Copland Chairman of the Board September 15, 1998
- ----------------------- and Chief Executive Officer
/s/ Richard W. Elwood Director of Finance September 15, 1998
- -----------------------
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<EXCHANGE-RATE> 1
<CASH> 13528
<SECURITIES> 0
<RECEIVABLES> 1249381
<ALLOWANCES> 450281
<INVENTORY> 1741215
<CURRENT-ASSETS> 3182509
<PP&E> 1090481
<DEPRECIATION> 362216
<TOTAL-ASSETS> 4063763
<CURRENT-LIABILITIES> 2060505
<BONDS> 0
0
1500002
<COMMON> 231536
<OTHER-SE> (237)
<TOTAL-LIABILITY-AND-EQUITY> 4063763
<SALES> 1079982
<TOTAL-REVENUES> 1079982
<CGS> 957498
<TOTAL-COSTS> 957498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6514
<INCOME-PRETAX> (917089)
<INCOME-TAX> 0
<INCOME-CONTINUING> (917089)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (917089)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> 0
</TABLE>
