SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED March 31, 1998.
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 0-28898
Independence Brewing Company
----------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2763840
------------ ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1000 East Comly Street, Philadelphia Pennsylvania 19149
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 537-2337
--------------
(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 issuer's classes of
common equity, as of the latest practicable date: On May 14, 1998, 3,357,078
shares of the issuer's Common Stock, no par value, and 4,600,000 Redeemable
Warrants were outstanding.
Page 1 of 12
<PAGE>
Independence Brewing Company
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet at December 31, 1997 and
March 31, 1998 (unaudited) 3
Statements of Operations for the Three Months Ended
March 31, 1998 and 1997 (unaudited) 4
Statements of Changes in Shareholders Equity for the Three
Months Ended March 31, 1998 (unaudited) and the
Year Ended December 31, 1997 5
Statements of Cash Flows for the Three Months Ended
March 31, 1998 and 1997 (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Page 2 of 12
<PAGE>
Independence Brewing Company
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
------
Current assets
Cash and cash equivalents $ 706,622 $ 1,229,209
Accounts receivable 20,362 34,211
Inventories 205,904 164,787
----------- -----------
Total current assets 932,888 1,428,207
Equipment and leasehold improvements, net 2,183,712 2,154,541
Deferred charges 89,575 90,820
Deferred stock issuance costs -- --
Other 134,986 48,941
----------- -----------
$ 3,341,161 $ 3,722,509
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Current portion of long-term debt $ 132,000 $ 108,000
Accounts payable and accrued expenses 323,554 295,571
----------- -----------
Total current liabilities 455,554 403,571
Long-term liabilities
Deferred rent 49,216 46,579
Long-term debt 412,018 406,670
----------- -----------
Total liabilities 916,788 856,820
----------- -----------
Shareholders' equity
Common stock, no par value - authorized, 19,000,000
shares; issued and outstanding, 3,307,078
shares in 1998 and 3,207,078 shares in 1997, respectively 9,041,634 8,976,634
Accumulated deficit (6,617,261 (6,110,945)
----------- -----------
Total shareholders' equity 2,424,373 2,865,689
----------- -----------
$ 3,341,161 $ 3,722,509
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3 of 12
<PAGE>
Independence Brewing Company
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Sales $ 171,118 $ 101,551
Less excise taxes 9,385 7,297
----------- -----------
Net sales 161,733 94,254
Cost of goods sold 305,727 259,896
----------- -----------
Gross loss (143,994) (165,642)
----------- -----------
Advertising, promotional and selling expenses 170,036 42,296
General and administrative expenses 187,972 237,441
----------- -----------
358,008 279,737
----------- -----------
Operating loss (502,002) (445,379)
----------- -----------
Other income (expense)
Interest expense (10,357) (2,957,814)
Other income, net 6,043 13,397
----------- -----------
(4,314) (2,944,417)
----------- -----------
Loss before income taxes (506,316) (3,389,796)
Income taxes -- --
----------- -----------
NET LOSS $ (506,316) $(3,389,796)
=========== ===========
Per share data
Net loss per common share basic and diluted $ (0.16) $ (1.23)
=========== ===========
Weighted average shares outstanding 3,208,189 2,767,079
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4 of 12
<PAGE>
Independence Brewing Company
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Three Months ended March 31, 1998 (unaudited) and the
year ended December 31, 1997
<TABLE>
<CAPTION>
Common stock
------------------ Total
Number of Accumulated shareholders'
shares Amount deficit equity
------ ------ ------- ------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 2,307,078 3,691,428 (1,334,356) 2,357,072
Issuance of common ctock 900,000 5,285,206 - 5,285,206
Net loss for the year ended
December 31, 1997 - - (4,776,589) (4,776,589)
--------- ---------- ----------- -----------
Balance at December 31, 1997 3,207,078 $8,976,634 $(6,110,945) $ 2,865,689
Issuance of common stock 100,000 65,000 - 65,000
Net loss for the three months
ended March 31, 1998 - - (506,316) (506,316)
--------- ---------- ----------- -----------
Balance at March 31, 1998 3,307,078 $9,041,634 $(6,617,261) $ 2,424,373
========= ========== =========== ===========
</TABLE>
Page 5 of 12
The accompanying notes are an integral part of this statement.
<PAGE>
Independence Brewing Company
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months ended
March 31,
------------------------
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Operating activities
Net loss $(506,316) $(3,389,796)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 37,840 26,190
Write-off of original issue discount and deferred charges -- 2,972,112
Increase (decrease) in accounts receivable 13,678 (2,067)
Increase (decrease) in inventories (38,117) 6,563
Decrease in other 17,202 360,520
Increase in accounts payable,
accrued expenses and other 30,620 (381,226)
--------- -----------
Net cash used in operating
activities (445,093) (407,704)
--------- -----------
Investing activities
Purchases of property and equipment (50,691) (355,826)
Other -- (90,000)
--------- -----------
Net cash used in investing
activities (50,691) (445,826)
--------- -----------
Financing activities
Repayments of long-term debt (26,803) (20,380)
Payment to reacquire preferred stock -- (700,000)
Proceeds from issuance of common stock, net -- 5,285,206
Advances from officers, net -- 10,000
Repayments of convertible debentures -- (800,000)
--------- -----------
Net cash provided by (used in) financing
activities (26,803) 3,774,826
--------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (522,587) 2,921,296
Cash and cash equivalents at
beginning of period 1,229,209 363,484
--------- -----------
Cash and cash equivalents at
end of period $ 706,622 $ 3,284,780
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 6 of 12
<PAGE>
Independence Brewing Company
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Independence Brewing Company (the Company) is a regional producer of fresh,
high-quality, preservative-free, craft brewed ales, lagers, porters and
seasonal beers. The Company competes with other beer and beverage companies
not only for consumer acceptance and loyalty but also for shelf and tap
space in retail establishments and for marketing focus by the Company's
third-party wholesale distributors and their customers, all of which also
distribute and sell other beers and alcoholic beverage products.
The manufacture and sale of alcoholic beverages is a business that is highly
regulated and taxed at the federal, state and local levels. The Company's
operations may be subject to more restrictive regulations and increased
taxation by federal, state and governmental agencies than are those of
non-alcohol related businesses.
1. Interim Financial Information
The financial statements of the Company as of March 31, 1998 and for the
three months ended March 31, 1998 and 1997 and related footnote information
are unaudited. All adjustments (consisting only of normal recurring
adjustments) have been made which, in the opinion of management, are
necessary for a fair presentation. Results of operations for the three
months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for any future period.
2. Loss Per Common Share
The Company adopted the provisions of SFAS No. 128, Earnings Per Share,
which eliminates primary and fully diluted earnings per share (EPS) and
requires presentation of basic and diluted EPS in conjunction with the
disclosure of the methodology used in computing such EPS. Basic EPS excludes
dilution and is computed by dividing income available to common shareholders
by the weighted average common shares outstanding during the period. Diluted
EPS takes into account the potential dilution that could occur if securities
or other contracts to issue common stock were exercised and converted into
common stock. Prior period EPS calculations have been restated to reflect
the adoption of SFAS No. 128. Options and warrants are not considered
because they are antidilutive.
NOTE B - INVENTORIES
Inventories consist of the following:
March 31, December 31,
1998 1997
--------- -----------
(unaudited)
Raw materials $ 32,667 $ 45,903
Work in process 48,394 32,469
Finished goods 27,267 20,272
Packaging 97,576 66,143
-------- --------
$205,904 $164,787
======== ========
Page 7 of 12
<PAGE>
NOTE C - LOSS PER SHARE
The Company's calculation of loss per share in accordance with SFAS No. 128
is as follows:
<TABLE>
<CAPTION>
Three months ended March 31, 1998
-------------------------------------------
Loss Shares Per share
(numerator) (denominator) amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic loss per share
Net loss $ (506,316) 3,208,189 $(0.16)
Effect of dilutive securities
Options - - -
----------- --------- ------
Diluted loss per share
Net loss plus assumed conversions $ (506,316) 3,208,189 $(0.16)
=========== ========= ======
</TABLE>
Options to purchase 65,000 shares of common stock at a weighted average
exercise price of $1.96 per share were outstanding during the periord. They
were not included in the computation of diluted loss per share because the
option exercise price was greater than the average market price.
<TABLE>
<CAPTION>
Three months ended March 31, 1997
-----------------------------------------
Loss Shares Per share
(numerator) (denominator) amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic loss per share
Net loss $(3,389,796) 2,767,079 $(1.23)
Effect of dilutive securities
Options - - -
----------- --------- ------
Diluted loss per share
Net loss plus assumed conversions $(3,389,796) 2,767,079 $(1.23)
=========== ========= ======
</TABLE>
NOTE D - ACQUISITIONS
1. On February 4, 1998, the Company executed a term sheet with Whitetail
Brewing, Inc. in which the parties agreed that the Company would
receive an exclusive license of the trademark and logo for "Nittany
Ale", a newly developed Whitetail Brewing product, for a five (5) year
term, in consideration for which the Company agreed to pay the
licensor a royalty for every case of Nittany Ale sold. In addition,
the Company agreed to engage Wade E. Keech, President and founder of
Whitetail Brewing, as exclusive sales representative of the Company in
the central and western Pennsylvania regions for which Mr. Keech will
receive commissions from the sales of all of the Company's products,
including Nittany Ale. The Company anticipates that the foregoing
terms will be incorporated in a definitive agreement to be effective
on or about the second quarter of 1998.
2. On March 25, 1998, the Company completed the acquisition of certain
assets of America U-Brew, Inc., and its affiliates used in connection
with the manufacture, sales and marketing of Gravity Ale, including
trademarks, trade names, logo, brand names, recipes and formulas,
packaging as well as equipment used in painting the glass bottles used
for the Gravity Ale products as well as certain finished goods
inventory. In connection with this Acquisition, the Company issued
100,000 shares of Common Stock and entered into three separate
Promissory Notes totalling approximately $61,000.
3. On April 6, 1998, the Company completed the purchase of all of the
assets of Blue Hen Beer Company, Ltd., including trademarks, trade
names, logo, and brand names connected with the "Blue Hen" brand,
packaging and certain finished goods inventory. In connection with
this acquisition, the Company issued 50,000 shares of Common Stock and
entered into a Promissory Note totalling $10,000 subsequent to March
31, 1998.
Page 8 of 12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Gross sales for the quarter ended March 31, 1998 were $171,118 as
compared to $101,551 for the comparable year-ago quarter. The growth in gross
sales from the comparable period last year was due to an increase sales volume
in comparison to the previous period.
Excise taxes for the quarter ended March 31, 1998 were $9,385 as compared
with $7,297 for the comparable year-ago quarter. Excise taxes as a percentage
of sales for the quarter ended March 31, 1998 were approximately 5% as compared
with 7% for the comparable year-ago quarter. The Company pays federal and
certain local taxes on sales volume. Accordingly, as sales increase, excise
taxes paid by the Company will increase unless the Company increases shipments
to jurisdictions where local excise taxes are paid by the third party wholesale
distributor rather than the brewer, as is the case in Maryland and the District
of Columbia.
Cost of goods sold for the quarter ended March 31, 1998 were $305,727
or 178% of sales, as compared to $259,896 or 256% of sales for the comparable
year-ago quarter. The decrease in cost of goods sold from the comparable period
last year reflects the increase in the volume of beer sold. Cost of goods sold
as a percentage of sales declined in comparison the year-ago quarter due to a
decline in repairs and maintenance expense. This was the result of the purchase
of new bottling equipment that cost less to maintain than the old equipment.
Advertising, promotional, and selling expenses for the quarter ended March
31, 1998 were $170,036 or 99% of sales, as compared to $42,296 or 42% of sales
for the comparable year-ago quarter. The increase in advertising expense from
the comparable period of a year-ago were primarily due to an increase in
billboard, magazine, radio and cable television advertisements. In addition,
there were also increasing costs associated with merchandising and direct mail
campaign.
General and administrative expenses for the three months ended March
31, 1998 were $187,972 or 110% of sales, as compared to $237,441 or 234% of
sales for the comparable year-ago quarter. The decrease in G&A expense from the
comparable period of a year-ago was primarily due to decreases in amortization
and professional fees costs.
Interest expense for the quarter ended March 31, 1998 were $10,357 as
compared to $2,957,814 for the comparable year-ago quarter. Interest expense was
substantially higher during the first quarter of 1997 in comparison to the same
period in 1998 due to the write-off of unamortized original issue discount
aggregating approximately 2,916,000 that arose as a result of the Company
repaying certain debentures and the Series B Preferred Stock from the net
proceeds of the Company's initial public offering that was completed in the
first quarter of 1997. The interest expense incurred for the first quarter of
1998 was associated with the Company's promissory note in favor of CoreStates
Bank, N.A. in connection with a Small Business Administration loan (the "SBA
Loan") and Philadelphia Industrial Development Corporation notes ("PIDC Notes").
Other income, net for the three months ended March 31,1998 was $6,043
as compared to $13,395 for the comparable year-ago quarter. The decrease in
other income, net form the comparable year-ago period was primarily due to a
decline in interest income as the Company's cash balance declined because of
operating losses, equipment purchases and an extensive advertising campaign.
Page 9 of 12
<PAGE>
Liquidity and Capital Resources
To date, the Company has funded its operations and capital requirements
through the issuance of Common Stock, the SBA Loan, the PIDC Notes, the issuance
of certain subordinated convertible notes in 1995 and during 1996. In February
1997, the Company completed its initial public offering. The Company received
approximately $5,285,000 of proceeds, net of underwriting discounts and
underwriting expenses (including the purchase of 600,000 redeemable warrants
upon partial exercise of the Underwriter's overallotment option and after
deducting the Underwriter's discount and offering expenses) from the initial
public offering. Cash flows used in operating activities for the three months
ended March 31, 1998 totaled $445,093 as compared to $407,704 for the comparable
year-ago period. The increase in use of cash is primarily due to the Company's
operating loss for the first quarter of 1998.
Cash used in investing activities for the quarter ended March 31, 1998
totaled $50,691 as compared to $445,826 for the same period last year. The
decrease in the use of cash in comparison to the same quarter last year reflects
the purchase of new bottling equipment and the cost of acquiring a trademark
during the first quarter of 1997.
Cash used in financing activities for the quarter ended March 31, 1998
was $26,803. Cash provided by financing activities for the quarter ended March
31, 1997 was $3,774,826. This decline from the same period of a year ago
reflects the net proceeds of $5,285,206 from the Company's initial public
offering during the first quarter of 1997. The decline also reflects the
repayment of certain debentures and Series B Preferred Stock and outstanding
debt to CoreStates Bank and PIDC.
The Company had cash and cash equivalents at March 31, 1998 and
December 31, 1997 of $706,622 and $1,229,209, respectively. The Company believes
that the net proceeds of the initial public offering will be sufficient to meet
short-term liquidity needs. The Company may also seek other long term financing.
No assurance can be given that such long term financing will be obtained on
commercially reasonable terms or at all.
Forward Looking Statements
The matters discussed in this Form 10-QSB that are forward looking
statements, relate to future events or the future financial performance of the
Company are based on current management expectations that involve risks and
uncertainties. Such statements are only predictions and actual events or
performance may differ materially from the events or performance expressed in
any such forward looking statements. Potential risks and uncertainties include,
without limitation: the impact of economic conditions generally and in the
industry for microbreweries; the potential decline in the level of demand for
the Company's products; the commencement of brewpub operations by the Company
and the inherent risks associated therewith; risk of third party claims
concerning the Company's intellectual property; loss of key personnel,
distributors or suppliers; limited product line; sales fluctuations due to
seasonality; continued competitive and pricing pressures in the industry;
product supply shortages; legal proceedings; and capital and financing
availability.
Inflation and Seasonality
Although the Company has not attempted to calculate the effect of
inflation, management does not believe inflation has had a material effect to
date on its results of operations. However, production and raw material costs
are expected to increase over time as a result of general economic inflation,
and there can be no assurance that the Company will be able to offset the
resulting negative effects on its business through increasing the sale prices of
its product.
Page 10 of 12
<PAGE>
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds
Changes in Securities
On March 30, 1998, the Company issued 100,000 shares of its common
stock and on April 6, 1998, the Company issued 50,000 shares of its Common
Stock to certain corporations as described below.
There were no underwriters retained by the Company in connection with
the issuance of the securities described in this Part II.
The Company relied on Section 4(2) of the Securities Act of 1993 in
connection with the issuance of its securities as described in this Part II.
The securities as described in this Part II were issued by the Company
in connection with certain acquisitions as follows:
On March 25, 1998, the Company completed the acquisition of certain
assets of America U-Brew, Inc., and its affiliates used in connection with the
manufacture, sales and marketing of Gravity Ale, including trademarks, trade
names, logo, brand names, recipes and formulas, packaging as well as equipment
used in painting the glass bottles used for the Gravity Ale products as well as
certain finished goods inventory. In addition to an undertaking to pay America
U-Brew up to the sum of $61,000 under certain conditions, the Company also
issued 100,000 shares of its common stock to America U-Brew in consideration for
the assets on March 30, 1998.
On April 6, 1998, the Company completed the purchase of all of the
assets of Blue Hen Beer Company, Ltd., including trademarks, trade names, logo,
and brand names connected with the "Blue Hen" brand, packaging and certain
finished goods inventory. In addition to an undertaking to pay Blue Hen Beer
Company, Ltd., the sum of $10,000, the Company also issued 50,000 shares of its
common stock to Blue Hen Beer Company, Ltd. in consideration for the assets on
April 6, 1998.
Use of Proceeds
On February 14, 1997, the Company sold 900,000 shares of Common Stock
at a price of $5 per share and sold 4,000,000 Redeemable Warrants at a price of
$.50 per share aggregating $6,500,000. In connection with the Offering, the
Company granted to the underwriters a 45-day option to purchase up to an
additional 135,000 shares of Common Stock at a price of $5 per share and/or
purchase an additional 600,000 Redeemable Warrants at a price of $.50 per share.
On March 13, 1997, the underwriters exercised its option to purchase the
additional 600,000 Redeemable Warrants aggregating $300,000. The underwriting
discounts and commissions and expenses of the Offering were approximately
$1,515,000 and the net proceeds to the Company was $5,285,000.
As of March 31, 1998, the Company has utilized $4,578,000 of the net
proceeds from the Offering. The funds were utilized as follows: 1) the repayment
of indebtedness of $1,550,000; 2) purchase and install machinery and equipment
of $731,000 and 3) working capital purposes of $2,297,000. As of March 31, 1998,
the Company had the remaining $707,000 of net proceeds in interest bearing
accounts.
Item 6. Exhibits and Reports on Form 8-K
None
(a) Exhibits
27.1 Financial Data Schedule at March 31, 1998
27.2 Financial Data Schedule at March 31, 1997
(b) Reports filed on Form 8-K.
None
Page 11 of 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Independence Brewing Company
By: /s/ Robert W. Connor, Jr.
------------------------------------
Robert W. Connor, Jr.
President, Chief Executive Officer
(and principal accounting officer)
Date: May 15, 1998
Page 12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 706,622
<SECURITIES> 0
<RECEIVABLES> 20,362
<ALLOWANCES> 0
<INVENTORY> 205,904
<CURRENT-ASSETS> 929,888
<PP&E> 2,495,384
<DEPRECIATION> 311,672
<TOTAL-ASSETS> 3,341,161
<CURRENT-LIABILITIES> 455,554
<BONDS> 0
0
0
<COMMON> 9,041,634
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,341,161
<SALES> 171,118
<TOTAL-REVENUES> 161,733
<CGS> 305,727
<TOTAL-COSTS> 358,008
<OTHER-EXPENSES> 6,043
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,357
<INCOME-PRETAX> (506,316)
<INCOME-TAX> 0
<INCOME-CONTINUING> (506,316)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (506,316)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 3,284,780
<SECURITIES> 0
<RECEIVABLES> 19,193
<ALLOWANCES> 0
<INVENTORY> 128,253
<CURRENT-ASSETS> 3,432,226
<PP&E> 1,900,855
<DEPRECIATION> 175,344
<TOTAL-ASSETS> 5,269,049
<CURRENT-LIABILITIES> 452,694
<BONDS> 522,632
0
0
<COMMON> 8,980,413
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,269,049
<SALES> 101,551
<TOTAL-REVENUES> 94,254
<CGS> 259,896
<TOTAL-COSTS> 279,737
<OTHER-EXPENSES> (13,397)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,957,814
<INCOME-PRETAX> (3,389,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,389,796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,389,796)
<EPS-PRIMARY> (1.23)
<EPS-DILUTED> (1.23)
</TABLE>
