UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-21511
V-ONE CORPORATION
-----------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 52-1953278
-------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
20250 CENTURY BLVD., SUITE 300, GERMANTOWN, MARYLAND 20874
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(301) 515-5200
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 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 [ ] .
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 10, 2000
----- ---------------------------
COMMON STOCK, $0.001 PAR VALUE PER SHARE 20,642,955
<PAGE>
V-ONE Corporation
Quarterly Report on Form 10-Q
INDEX
PAGE NO.
-------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Balance Sheets as of March 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to the Condensed Financial 6
Item 2. Management's Discussion and Analysis 8
Item 3. Quantitative and Qualitative 11
Market Risk
PART II. OTHER INFORMATION 12
Signatures 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
V-ONE CORPORATION
CONDENSED BALANCE SHEETS
March 31, December 31,
2000 1999
(unaudited)
------------ --------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,794,388 $ 7,136,943
Accounts receivable, net 981,020 854,853
Finished goods inventory, net 186,130 46,087
Prepaid expenses and other current assets 396,392 249,339
------------ --------------
Total current assets 9,357,930 8,287,222
Property and equipment, net 598,972 585,708
Other assets 871,454 902,506
------------ --------------
Total assets $10,828,356 $ 9,775,436
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,324,320 $ 1,157,660
Deferred income 497,157 420,922
Capital lease obligations - current 78,160 78,794
------------ --------------
Total current liabilities 1,899,637 1,657,376
Deferred rent 148,987 156,711
Capital lease obligations - noncurrent 101,576 119,746
------------ --------------
Total liabilities 2,150,200 1,933,833
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 13,333,333
Series B convertible preferred stock,
1,287,554 designated,
issued and outstanding (liquidation
of $3,000,000) 1,288 1,288
Series C redeemable preferred stock,
500,000 designated; 177,148 and
and 335,000 shares issued and
outstanding, respectively (liquidation
preference of $4,650,000 and
$8,794,000, respectively)
Common stock, $0.001 par value; 33,333,333 shares
authorized; 20,378,163 and 18,233,780
shares issued and outstanding,
respectively 20,378 18,233
Accrued dividends payable 256,442 272,245
Additional paid-in capital 49,733,160 47,197,893
Notes receivable from sales of common stock - (3,785)
Accumulated deficit (41,333,289) (39,644,606)
------------ --------------
Total shareholders' equity 8,678,156 7,841,603
------------ --------------
Total liabilities and shareholders' $10,828,356 $ 9,775,436
equity ============ ==============
The accompanying notes are an integral part of these financial
statements.
3
<PAGE>
V-ONE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Three months Three months
ended ended
March 31, March 31,
2000 1999
(unaudited) (unaudited)
---------- -----------
Revenues:
Products $1,133,453 $1,369,249
Consulting and services 250,468 327,223
---------- -----------
Total revenues 1,383,921 1,696,472
Cost of revenues:
Products 70,514 162,456
Consulting and services 12,481 19,933
---------- -----------
Total cost of revenues 82,995 182,389
---------- -----------
Gross profit 1,300,926 1,514,083
Operating expenses:
Sales and marketing 1,204,434 1,507,697
General and administrative 724,779 935,838
Research and development 932,398 1,181,055
---------- -----------
Total operating expenses 2,861,611 3,624,590
---------- -----------
Operating loss (1,560,685) (2,110,50)
Other income (expense):
Interest expense (6,499) (75,146)
Interest income 84,962 6,356
---------- -----------
Total other income (expense) 78,463 (68,790)
---------- -----------
Net loss (1,482,222) (2,179,297)
Dividend on preferred stock 206,461 -
---------- ------------
Loss attributable to holders
of common stock $(1,688,683) $(2,179,29)
========== ===========
Basic and diluted loss
attributable to holders
of common stock $ (0.09) $ (0.13)
========== ===========
Weighted average number of
common shares outstanding 18,500,300 16,709,123
common shares =========== ===========
The accompanying notes are an integral part of these financial
statements.
4
<PAGE>
V-ONE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Three months Three months
ended ended
March 31, March 31,
2000 1999
(unaudited) (unaudited)
---------- -----------
Cash flows from operating activities:
Net loss $(1,482,22) $ (2,179,29)
Adjustments to reconcile net loss to
Depreciation and amortization 84,936 152,360
Amortization of deferred financing - 30,834
Changes in assets and liabilities:
Accounts receivable (126,167) (36,194)
Inventory (140,043) (8,012)
Prepaid expenses and other (116,001) 84,797
Deferred income 76,235 (231,621)
Deferred rent (7,724) -
Accounts payable and accrued 166,660 (166,008)
expenses - -------- -----------
Net cash used in (1,544,32) (2,353,14)
operating activiites
Cash flows from investing activities:
Purchase of property and (98,201) (30,458)
Collection of note receivable 3,785 -
---------- ----------
Net cash used in investing (94,416) (30,458)
activities
Cash flows from financing activities:
Exercise of options and warrants 89,037 195,863
Payment of debt financing costs - (185,000)
Issuance of common stock 2,375,000 -
Payment of stock issuance costs (149,046) -
Principal payments on (18,804) (15,992)
Repayment of note payable - (5,259)
Issuance of notes payable - 3,000,000
---------- ----------
Net cash provided by financing
activities 2,296,187 2,989,612
---------- ----------
Net increase in cash and cash 657,445 606,013
Cash and cash equivalents at 7,136,943 635,959
beginning of period
---------- ----------
Cash and cash equivalents at end of $7,794,388 $1,241,972
period ========== ==========
The accompanying notes are an integral part of these financial
statements.
5
<PAGE>
V-ONE CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed financial statements for the three-months ended March 31, 2000 and
March 31, 1999 are unaudited and reflect all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary to
present fairly the results for the interim periods. These financial statements
should be read in conjunction with the audited financial statements as of
December 31, 1998 and 1999 and for the three years in the period ended December
31, 1999, which are included in the Company's 1999 Annual Report on Form 10-K
("Form 10-K").
The preparation of financial statements to be in conformity with generally
accepted accounting principles 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 the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and would
impact future results of operations and cash flows.
The results of operations for the three-month period ended March 31, 2000 are
not necessarily indicative of the results expected for the full year ending
December 31, 2000.
Certain prior year amounts have been reclassified to conform to the 2000
presentation. These changes had no impact on previously reported results of
operations.
2. Risks and Uncertainties
The Company invests its cash primarily in money market funds with an
international commercial bank. The Company's cash balances exceed federally
insured amounts. The Company sells its product to a wide variety of customers in
a variety of industries. The Company performs ongoing credit evaluations of its
customers but does not require collateral or other security to support customer
accounts receivable. In management's opinion, the Company has provided
sufficient provisions to prevent a significant impact of credit losses to the
financial statements.
3. Computation of Net Loss Per Common Share
Basic earnings (or loss) per share is computed by dividing net income (or loss)
by the weighted average number of shares of common stock outstanding. Diluted
earnings per share is computed by dividing net income (or loss) by the weighted
average common and potentially dilutive common equivalent shares outstanding.
However, the computation of diluted loss per share was antidilutive in each of
the quarters presented; therefore, basic and diluted loss per share are the
same.
4. Common and Preferred stock
In March 2000, several investors exercised the non-detachable warrants of the
Series C Preferred Stock. As a result of these exercises, 1,619,883 shares of
common stock were issued and registered as part of a Form S-3 deemed effective
on April 26, 2000. The Series C Preferred Stock was reduced by 157,852 shares as
a result of the warrant exercise pursuant to the terms of the September 9, 1999
offering. There were no proceeds generated from this exercise.
5. Other Events
In March 2000, the Company issued, pursuant to Rule 506 of Regulation D, 500,000
shares of Common Stock at a purchase price of $4.75 per share to Cranshire
Capital, L.P. in exchange for $2,375,000.
6. Supplemental Cash Flow Disclosure
6
<PAGE>
Selected noncash activities were as follows:
Three months ended March 31,
------------------------------
2000 1999
---- ----
(unaudited) (unaudited)
----------- -----------
Noncash investing and financing activities:
Redemption of preferred stock (4,143,61) -
Payment of preferred stock (222,263) -
dividends
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934. These statements may differ in a
material way from actual future events. For instance, factors that could cause
results to differ from future events include rapid rates of technological change
and intense competition, among others. The Company's total revenues and
operating results have varied substantially from quarter to quarter and should
not be relied upon as an indication of future results. Several factors may
affect the ability to forecast the Company's quarterly operating results,
including the size and timing of individual software and hardware sales; the
length of the Company's sales cycle; the level of sales and marketing, research
and development and administrative expenses; and general economic conditions.
Operating results for a given period could be disproportionately affected by any
shortfall in expected revenues. In addition, fluctuation in revenues from
quarter to quarter will likely have an increasingly significant impact on the
Company's results of operations. The Company's growth in recent periods may not
be an accurate indication of future results of operations in light of the
Company's short operating history, the evolving nature of the network security
market and the uncertainty of the demand for Internet and intranet products in
general and the Company's products in particular. Because the Company's
operating expenses are based on anticipated revenue levels, a small variation in
the timing of recognition of revenues can cause significant variations in
operating results from quarter to quarter.
Readers are also referred to the documents filed by the Company with the SEC,
specifically the Company's latest Annual Report on Form 10-K that identifies
important risk factors for the Company.
RESULTS OF OPERATIONS
REVENUES
Total revenues decreased from approximately $1,696,000 for the three months
ended March 31, 1999 to approximately $1,384,000 for the three months ended
March 31, 2000. This decrease was primarily due to lower sales of the Company's
network security products as well as maintenance and consulting revenues.
Product revenues are derived principally from software licenses and the sale of
hardware products. Product revenues decreased from approximately $1,369,000 for
the three months ended March 31, 1999 to approximately $1,133,000 for the three
months ended March 31, 2000. Consulting and services revenues are derived
principally from fees for services complementary to the Company's products,
including consulting, maintenance and training. Consulting and services revenues
decreased from approximately $327,000 for the three months ended March 31, 1999
to approximately $250,000 for the three months ended March 31, 2000 due
principally to a lower number of maintenance contracts provided to customers.
COST OF REVENUES
Total cost of revenues as a percentage of total revenues was approximately 11%
and 6% for the three months ended March 31, 1999 and 2000, respectively. Total
cost of revenues is comprised of cost of product revenues and cost of consulting
and services revenues.
Cost of product revenues consists principally of the costs of computer hardware,
licensed technology, manuals and labor associated with the distribution and
support of the Company's products. Cost of product revenues decreased from
approximately $162,000 for the three months ended March 31, 1999 to
approximately $71,000 for the three months ended March 31, 2000. Cost of product
revenues as a percentage of product revenues was approximately 12% and 6% for
the three months ended March 31, 1999 and 2000, respectively. The dollar and
percentage decreases were primarily attributable to a higher proportion of
software licenses of the Company's principal product, SmartGate, as compared to
turnkey hardware sales, primarily of sales of SmartWall.
Cost of consulting and services revenues consists principally of personnel and
related costs incurred in providing consulting, support and training services to
customers. Cost of consulting and services revenues decreased from approximately
8
<PAGE>
$20,000 for the three months ended March 31, 1999 to approximately $12,000 for
the three months ended March 31, 2000. Cost of consulting and services revenues
as a percentage of consulting and services revenues was approximately 6% and 5%
for the three months ended March 31, 1999 and 2000, respectively. The dollar
decrease was principally due to a decrease in the number of installations of
hardware systems requested by customers and the percentage decrease resulted
from this lower cost.
OPERATING EXPENSES
Sales and Marketing -- Sales and marketing expenses consist principally of the
costs of sales and marketing personnel, advertising, promotions and trade shows.
Sales and marketing expenses decreased by $304,000 from approximately $1,508,000
for the three months ended March 31, 1999 to approximately $1,204,000 for the
three months ended March 31, 2000. Sales and marketing expenses as a percentage
of total revenues were approximately 89% and 87% for the three months ended
March 31, 1999 and 2000, respectively. The dollar decrease is mainly due to
lower advertising and promotion expenses this year. Sales and marketing expenses
are expected to increase in the near term as a result of the Company's increased
promotions and trade show expenses. This statement is based on current
expectations. It is forward-looking, and the actual results could differ
materially. For information about factors that could cause the actual results to
differ materially, please refer to Item 1. "Business - Risk Factors That May
Affect Future Results and Market Price of Common Stock" in the Company's Form
10-K.
General and Administrative -- General and administrative expenses consist
principally of the costs of finance, management and administrative personnel and
facilities expenses. General and administrative expenses decreased from
approximately $936,000 for the three months ended March 31, 1999 to
approximately $725,000 for the three months ended March 31, 2000. The decrease
was due principally to lower legal and accounting fees this year. General and
administrative expenses as a percentage of total revenues were approximately 55%
and 52% for the three months ended March 31, 1999 and 2000, respectively. The
dollar and percentage decreases in 2000 were principally due to reduced spending
on professional fees. The Company anticipates that general and administrative
expenses, exclusive of costs associated with financings, will increase modestly
in future periods. This statement is based on current expectations. It is
forward-looking, and the actual results could differ materially. For information
about factors that could cause the actual results to differ materially, please
refer to Item 1. "Business - Risk Factors That May Affect Future Results and
Market Price of Common Stock" in the Company's Form 10-K.
Research and Development -- Research and development expenses consist
principally of the costs of research and development personnel and other
expenses associated with the development of new products and enhancement of
existing products. Research and development expenses decreased from
approximately $1,181,000 for the three months ended March 31, 1999 to
approximately $932,000 for the three months ended March 31, 2000. Research and
development expenses as a percentage of total revenues were approximately 70%
and 67% for the three months ended March 31, 1999 and 2000, respectively. The
dollar and percentage decreases were primarily due to lower consulting expense
offset in part by higher recruiting fees. The Company believes that a continuing
commitment to research and development is required to remain competitive.
Accordingly, the Company intends to allocate substantial resources to research
and development, but research and development expenses may vary as a percentage
of total revenues. This statement is based on current expectations. It is
forward-looking, and the actual results could differ materially. For information
about factors that could cause the actual results to differ materially, please
refer to Item 1. "Business - Risk Factors That May Affect Future Results and
Market Price of Common Stock" in the Company's Form 10-K.
Interest Income and Expenses -- Interest income represents interest earned on
cash and cash equivalents. Interest income increased from approximately $6,000
for the three months ended March 31, 1999 to approximately $85,000 for the three
months ended March 31, 2000. The increase was attributable to higher levels of
cash and cash equivalents. Interest expense represents interest paid or payable
on the loans and capitalized lease obligations. Interest expense decreased from
approximately $75,000 for the three months ended March 31, 1999 to approximately
$6,000 for the three months ended March 31, 2000. The decrease was primarily due
to the payoff in the third quarter of 1999 of a loan obtained in the first
quarter of 1999.
Income Taxes -- The Company did not incur income tax expenses as a result of the
net loss incurred during the three months ended March 31, 1999 and 2000,
respectively.
9
<PAGE>
Dividend on Preferred Stock -- The Company provided approximately $206,000 for a
dividend on the Series C Preferred Stock during the first quarter of 2000. Under
the terms of the Series C Preferred Stock Agreement the Company may elect to pay
these related dividends in cash and stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used cash of approximately $2,353,000 and
$1,544,000 for the three months ended March 31, 1999 and 2000, respectively.
Cash used in operating activities resulted principally from net losses in both
periods. The Company believes that its current cash and cash equivalents and
funds that may be generated from on-going operations will be sufficient to meet
its normal operating requirements over the near term.
The Company's financing activities provided cash of approximately $2,990,000 and
$2,296,000 during the three months ended March 31, 1999 and 2000, respectively.
In the first quarter of last year the cash was provided primarily by the
issuance of a $3.0 million note to a lender, which was paid on September 30,
1999. In March 2000, the Company issued, pursuant to Rule 506 of Regulation D,
500,000 shares of Common Stock at a purchase price of $4.75 per share to
Cranshire Capital, L.P. in exchange for $2,375,000.
The Company's net tangible asset balance of $7,841,000 and $8,678,000 at
December 31, 1999 and March 31, 2000, respectively, reflects favorably on the
resources of the organization.
As of March 31, 2000, the Company had an accumulated deficit of approximately
$41,333,000. The Company currently expects to achieve profitability by the
fourth quarter of fiscal year 2000. This statement is based on current
expectations. It is forward-looking, and the actual results could differ
materially. For information about factors that could cause the actual results to
differ materially, please refer to Item 1. "Business - Risk Factors That May
Affect Future Results and Market Price of Common Stock" in the Company's Form
10-K.
YEAR 2000 ISSUE
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $25,000 during 1999 in connection with remediating its
systems. The Company is not aware of any material problems resulting from Year
2000 issues, either with our products, our internal systems, or the products and
services of third parties. The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is not materially exposed to fluctuations in currency exchange rates
as all of its products are invoiced in U.S. dollars. The Company does not hold
any derivatives or marketable securities. However, the Company is exposed to
interest rate risk. The Company believes that the market risk arising from
holdings of its financial instruments is not material.
10
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
On January 27, 2000, plaintiff George McMeen filed a Class Action Complaint in
the U.S. District Court for the District of Maryland, Civil Action No.
MJG-CV-263, against David D. Dawson, Steve Mogul and Margaret Grayson
(collectively, "Individual Defendants") and the Company (collectively,
"Defendants"), alleging claims for violation of Section 10(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder by the
Defendants, and violation of Section 20(a) of the Exchange Act by the Individual
Defendants. On February 16, 2000, plaintiff Raj Patel filed a nearly identical
Class Action Compliant in the U.S. District Court for the District Court of
Maryland, Civil Action No. PJM-CV-469. Neither complaint specifies the amount of
alleged damages.
On February 18, 2000, the Court entered an Order extending the time for
Defendants to file a responsive pleading in the McMeen matter until 45 days
after the later of appointment of Lead Plaintiff(s) and Lead Counsel pursuant to
15 U.S.C. 78u-4(a)(3) or the filing of a consolidated amended compliant in the
matter. The Court entered an identical Order in the Patel matter on March 3,
2000.
Defendants deny all wrongdoing and intend to contest both cases vigorously. Both
cases remain pending.
Item 2. Changes in Securities and Use of Proceeds
In March 2000, the Company issued, pursuant to Rule 506 of Regulation D, 500,000
shares of Common Stock at a purchase price of $4.75 per share to Cranshire
Capital, L.P. in exchange for $2,375,000.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibit and Reports on Form 8-K
(a) The following exhibits are filed as part of this quarterly report on Form
10-Q for the period ended March 31, 2000:
Exhibit Index:
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial data schedule for the three months ended March 31, 2000.
(b) There were no reports on Form 8-K filed for the quarter ending March 31,
2000.
11
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
<S> <C> <C>
V-ONE CORPORATION
Registrant
Date: May 10, 2000 By: /s/ Margaret E. Grayson
------------------------------
Name: Margaret E. Grayson
Title: Senior Vice President and Chief Financial Officer
</TABLE>
(Duly authorized officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-Q FOR THE
PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001008946
<NAME> V-ONE CORPORTATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,794,388
<SECURITIES> 0
<RECEIVABLES> 1,143,892
<ALLOWANCES> 162,872
<INVENTORY> 186,130
<CURRENT-ASSETS> 9,357,930
<PP&E> 1,565,930
<DEPRECIATION> 966,992
<TOTAL-ASSETS> 10,828,356
<CURRENT-LIABILITIES> 1,899,637
<BONDS> 0
0
1,465
<COMMON> 20,378
<OTHER-SE> 8,656,313
<TOTAL-LIABILITY-AND-EQUITY> 10,828,356
<SALES> 1,383,921
<TOTAL-REVENUES> 1,383,921
<CGS> 82,995
<TOTAL-COSTS> 2,861,611
<OTHER-EXPENSES> 206,461
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,463
<INCOME-PRETAX> (1,688,683)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,688,683)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,688,683)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
