<PAGE>
Form 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-20947
-----------
On-Site Sourcing, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 54-1648470
-------- ----------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1111 N. 19th Street, Suite 600, Arlington, VA 22209
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 276-1123
--------------
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 stock as of March 31, 1998.
Common Stock 0.01 par value Number of Shares
--------------------------- ----------------
No Class 4,824,669
Preferred Stock 0.01 par value
------------------------------
No Class None
<PAGE>
On-Site Sourcing, Inc.
Index
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Part I. Financial Information.
Item 1. Financial Statements
Balance sheets--
September 30, 1998 and December 31, 1997 3
Statements of Operations--
Nine and Three months ended September 30, 1998 and 1997 4
Statements of Stockholders Equity--
Nine months ended September 30, 1998 and 1997 5
Statements of Cash Flows--
Nine and Three months ended September 30, 1998 and 1997 6
Condensed notes to financial statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10-13
Part II. Other Information
Signatures 13
</TABLE>
Page 2 of 13
<PAGE>
ON-SITE SOURCING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited
Sept 30, Dec. 31,
1998 1997
--------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ 1,490,702
Accounts receivable, net 6,516,081 5,921,063
Prepaid supplies 458,831 417,693
Prepaid expenses 213,182 216,747
---------- -----------
Total current assets 7,188,094 8,046,205
Property and equipment, net 4,399,550 4,069,097
Note receivable--officer 25,000 25,000
Other assets, net 51,319 98,781
---------- ----------
$ 11,663,963 $ 12,239,083
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 1,467,991 $ 1,992,580
Line of Credit 1,061,000 --
Accrued and other liabilities 1,369,514 924,487
Current portion of long-term debt 483,783 411,894
Provision for income taxes, current 101,298 139,798
---------- ---------
Total current liabilities 4,483,586 3,468,759
Long-term debt net of current portion 1,014,691 1,094,444
Deferred rent 96,509 96,509
Provision for Income taxes, net of current portion 2,838 419,395
Deferred taxes 33,046 66,989
Commitments and contingencies -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 20,000,000 shares authorized
4,824,669 and 4,802,221 shares issued and outstanding 48,246 48,022
Preferred stock,$.01 par value, 1,000,000 shares
authorized, no shares issued and outstanding -- --
Subscription receivable (50,400) (50,400)
Additional paid in capital 6,432,691 6,367,379
Retained earnings (397,244) 727,986
---------- ----------
6,033,293 7,092,987
---------- ----------
$ 11,663,963 $ 12,239,083
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements
Page 3 of 13
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
----------------------------- --------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 18,050,060 $ 13,894,768 6,601,801 5,168,454
Costs and expenses
Cost of sales 15,543,482 10,067,691 5,376,156 3,800,858
-------------- ------------- ------------ ------------
2,506,578 3,827,077 1,225,645 1,367,596
-------------- ------------- ------------ ------------
Selling expense 2,011,197 1,630,957 727,123 582,546
Administrative expense 2,137,751 1,306,318 805,270 498,184
-------------- ------------- ------------ ------------
4,148,948 2,937,275 1,532,393 1,080,730
-------------- ------------- ------------ ------------
Earnings from operations (1,642,371) 889,802 (306,748) 286,866
Other income (expense)
Other income 203,915 68,161 31,858 43,338
Other expense (175,775) (103,347) (100,484) (30,626)
-------------- ------------- ------------ ------------
28,140 (35,186) (68,626) 12,712
-------------- ------------- ------------ ------------
Earnings (Loss) before income taxes (1,614,230) 854,616 (375,374) 299,578
Income tax (benefit) expense (489,000) 364,050 (38,500) 130,950
-------------- ------------- ------------ ------------
Net (Loss) Earnings $ (1,125,230) $ 490,566 (336,874) 168,628
-------------- ------------- ------------ ------------
Basic earnings (loss) per common share $ (0.23) $ 0.10 $ (0.07) $ 0.04
Diluted earnings per share $ (0.23) $ 0.10 $ (0.07) $ 0.04
</TABLE>
See notes to financial statements
Page 4 of 13
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Unaudited
<TABLE>
<CAPTION>
Additional
Common Common Paid in Subscriptions Retained
Shares Stock Capital Receivable Earnings Total
-------------- ------------ --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 4,802,221 $ 48,022 $ 6,367,379 $ (50,400) $ 727,986 $ 7,092,987
Sale of common stock 22,448 224 65,312 65,536
Net loss (1,125,230) (1,125,230)
Balance at Sept 30, 1998 4,824,669 $ 48,246 $ 6,432,691 $ (50,400) $ (397,244) $ 6,033,293
--------- ------ --------- -------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Additional
Common Common Paid in Subscriptions Retained
Shares Stock Capital Receivable Earnings Total
-------------- ------------ --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 4,794,021 $ 47,940 $ 6,351,911 $ (50,400) $ 6,913 $ 6,356,364
--
Net earnings 490,566 490,566
Balance at Sept 30, 1997 4,794,021 $ 47,940 $ 6,351,911 $ (50,400) $ 497,479 $ 6,846,930
--------- ------ --------- -------- ------- ---------
</TABLE>
Page 5 of 13
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------------- -----------------------------
Sept 30, Sept 30, Sept 30, Sept 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ (1,125,230) $ 490,566 $ (336,874) $ 168,628
------------ ------------ ------------ ------------
Adjustments to reconcile net earnings to net cash
(used in) provided by operations
Depreciation and amortization 754,569 536,766 271,729 193,040
Loss (gain) on disposition of equipment -- (1,030) -- (248)
Changes in assets and liabilities
(Increase) decrease in accounts receivable, net (595,018) (1,330,642) 8,726 817,945
(Increase) decrease in prepaid supplies (41,138) (188,849) 6,669 106,991
(Increase) decrease in prepaid expenses 3,565 (46,265) (39,233) (15,434)
(Increase) decrease in other assets 47,462 (6,285) 8,134 (36,483)
Increase (decrease) in accounts payable--trade (524,588) 202,954 (175,350) (436,596)
Increase in accrued and other liabilities 445,027 877,661 349,789 830,290
Increase (decrease) in deferred rent -- 1,865 -- (1)
Increase (decrease) in provison for income taxes (455,057) -- (38,500) --
Increase (decrease) in deferred taxes (33,943) 250,428 -- 17,328
------------ ------------ ------------ ------------
Total Adjustments (399,122) 296,603 391,964 1,476,832
------------ ------------ ------------ ------------
Net cash provided by (used in) operations (1,524,352) 787,169 55,090 1,645,460
------------ ------------ ------------ ------------
Cash flows from investing activities
Capital expenditures (1,085,022) (634,780) (246,240) (25,310)
------------ ------------ ------------ ------------
Net cash used in investing activities (1,085,022) (634,780) (246,240) (25,310)
------------ ------------ ------------ ------------
Cash flows from financing activities
Proceeds from sale of common stock and
exercise of warrants 65,536 -- -- --
Proceeds of long-term debt agreements 316,000 1,150,455 -- 50,455
Payments under long-term debt agreements (323,864) (1,044,593) (118,850) (531,327)
Net borrowings (payments) under line of credit agreement 1,061,000 -- 310,000 --
Net cash provided by financing activities 1,118,672 105,862 191,150 (480,872)
------------ ------------ ------------ -------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (1,490,702) 258,251 -- 1,139,278
Cash and cash equivalents, beginning 1,490,702 1,894,722 -- 1,013,695
Cash and cash equivalents, ending -- $ 2,152,973 $ -- $ 2,152,973
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements
Page 6 of 13
<PAGE>
On-Site Sourcing, Inc.
Condensed Notes to Financial Statements
(unaudited)
- - --------------------------------------------------------------------------------
September 30, 1998
- - --------------------------------------------------------------------------------
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in the annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading.
In the opinion of management, the accompanying condensed financial statements
reflect all necessary adjustments and reclassifications that are necessary for
fair presentation for the periods presented. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes filed in the Company's Annual Report on Form 10-KSB.
The results of operations for the six and three months ended September 30, 1998
are not necessarily indicative of the results to be expected for the full year.
Revenue Recognition
Revenue from facilities management is recognized based on monthly fixed fees
and, in certain cases, variable per copy fees, as contained in facilities
management agreements. Revenue from reprographic and imaging services is
recognized on a per copy or image basis upon completion of the services. Revenue
from information technology services is billed on an hourly basis.
Property and Equipment
Property and equipment consists of copy center equipment, office furniture and
fixtures, and delivery equipment. Depreciation is provided for in sufficient
amounts to relate the cost of depreciable assets to operations over their
estimated service lives, ranging from two to ten years. The straight line method
is followed for financial reporting purposes. Accelerated methods are used for
tax purposes.
Income Taxes
The provision for income taxes presented in the statements of earnings is
based upon the estimated effective tax rate for the year, and is largely
determined by management's estimate as of the interim date of projected taxable
income for the entire fiscal year.
Page 7 of 13
<PAGE>
On-Site Sourcing, Inc.
Condensed Notes to Financial Statements--Continued
(unaudited)
- - --------------------------------------------------------------------------------
September 30, 1998
- - --------------------------------------------------------------------------------
Earnings per Common Share
Basic earnings per share is calculated using the average number of shares
outstanding and excludes dilution. Diluted earnings per share is computed on the
basis of the average number of shares outstanding plus the effect of outstanding
options using the "treasury stock method". Prior year earnings per share have
been restated to conform to this method.
NOTE B--CREDIT FACILITIES
The Company entered into an agreement for a working capital line of credit with
a financial institution for $2,500,000. The line of credit bears interest at the
financial institution's prime rate or the 30 day LIBOR rate plus 2.25%, payable
monthly. Any remaining principal balance and accrued interest is due at the
maturity date of April 30, 1999. The line of credit is secured by certain assets
of the Company, including accounts receivable and certain fixed assets. As of
September 30, 1998 there were advances made under the line of credit of
$1,061,000
During 1997, the Company entered into a term note with a financial institution
to provide $1,100,000 to refinance certain capitalized lease obligations. The
note is payable in 48 monthly installments, bears interest at the rate of 9.02%,
and matures on April 30, 2001. The note is collateralized by specific equipment
and is subject to certain financial covenants. The balance of the term note at
September 30, 1998 was $687,500
During 1997, the Company has financed certain equipment purchases of
approximately $361,000 with notes with terms of 36 to 48 months and interest
rates of 5.0% to 9.7%. During 1998 the Company financed additional equipment
purchases under similar terms. The balance of these notes at September 30, 1998
was approximately $810,896.
The Company has financed certain equipment purchases under capitalized leases,
with terms of sixty months.
NOTE C--RELATED PARTY TRANSACTIONS
Transactions with an Officer/Shareholder
During the Nine months ended September 30, 1998 and 1997, the Company recorded
the following transaction with an officer/shareholder:
Page 8 of 13
<PAGE>
During the Nine months ended September 30, 1998 and 1997, the Company
incurred approximately $44,000 and $30,000, respectively, for legal services
rendered by the officer/shareholder. During the Nine months ended September
30, 1998 and 1997, the Company recorded revenue of approximately $16,500 and
$3,400, respectively, for reprographic services. There was no balance of
accounts receivable due from the officer/shareholder as of September 30, 1998
Subscription receivable--Shareholder
The Company has a note receivable from an officer/director for $89,900 in
connection with the exercise of stock options. The note bears interest at 6% per
year with the remaining principal and interest due April 1, 1999. The balance of
the note at September 30, 1998 was $50,400.
Note receivable--Officer
During 1996, the Company entered into a note agreement with a former
officer/shareholder in the amount of $25,000. The loan bears interest at the
prime rate of interest and was due in September 1998. The Note was settled in
October 1998.
NOTE D--COMMITMENTS
The Company has annual rental and lease commitments with a term of one year or
more for its offices and production facilities that expire at various times
through 2006. The minimum annual rent is approximately $1,400,000
NOTE E--INCENTIVE STOCK OPTION PLANS
In 1995 through 1998, the Company adopted incentive stock option plans, under
which pools of 510,000, 200,000, 500,000, and 700,000 shares respectively have
been reserved. The plans are administered and terms of option grants are
established by the Board of Directors. Under the terms of the plans, options may
be granted to the Company's employees and directors to purchase shares of common
stock. Options become exercisable ratably over a vesting period as determined by
the Board of Directors, and expire over terms not exceeding ten years from the
date of grant, three months after termination of employment, or one year after
the death or permanent disability of the employee. The Board of Directors
determines the option price (not less than fair market value) at the date of
grant.
Pursuant to an employment agreement, the Company had outstanding options to sell
162,000 shares of common stock to an officer/director of the Company at an
exercise price of $.56 per share. The options, which were fully vested during
1994, were exercised on March 29, 1996 for $90,000. In connection with the
exercise of the options, the Company loaned $89,900 to the officer/director. The
balance of the note on September 30, was $50,400.
At September 30, 1998 the Company had outstanding options to sell 126,000 shares
of common stock to an officer/director at an exercise price of $1.11 per share.
As of September 30, 1998 the options are fully vested. The options expire in
December 2000.
The Company has outstanding employee stock options for 1,869,355 shares of
common stock at exercise prices ranging from $1.11 to $3.50 per share. As of
September 30, 1998 719,949 of the shares are vested with the remainder scheduled
to vest through December 2003.
Page 9 of 13
<PAGE>
- - --------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Conditions and Results of
Operations
On-Site Sourcing, Inc. (On-Site or the "Company") provides reprographic,
document management, imaging, facilities management services and information
technology services to law firms, corporations, non-profit organizations,
accounting firms, financial institutions and other organizations throughout
the East Coast of the United States. In order to meet the highly specialized
requirements of each client, On-Site offers a variety of customized
reprographic and facilities management services. The Company provides
reprographic and imaging services 24 hours-per-day, seven days-per-week
including copying, binding, labeling, collating and indexing in support of
complex document-intensive litigation as well as higher volume production of
manuals, brochures and other materials for corporations and non-profit
organizations. On-Site also provides on-premises management of customers'
support services including mailroom operations, facsimile transmission,
records and supply room management and copying services. The information
technology group provides a full range of technology services to professional
service organizations, including systems design and integration, training and
network management services.
The nature of the IT Group's value-added services is expected to produce
significant revenue and increased margins in future periods. The IT Group was
formed in response to the need of law firms for new client/server applications
and connectivity, requiring IT expertise that is difficult to acquire due the
competitive nature of the industry. The competitive law firm has the need for
E-mail, integrated billing and document management services and recurring
technology upgrades that are being demanded by their clients. These are problems
that the IT Group is beginning to address for these firms.
This Form 10-QSB contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, demand for services, market
acceptance of the new IT group, impact of competitive services and pricing,
commercialization and technical difficulties, capacity constraints or
difficulties, general business and economic conditions and other risks detailed
in the Company's Annual Report, Form 10-KSB and other filings with the
Securities and Exchange Commission.
Nine Months ended 1998 vs. 1997
Revenue for the Nine months ended September 30, 1998 increased 30% or $4,155,292
to $18,050,060 over the comparable period in 1997. Principal reasons for the
increase are higher demand for the Company's reprographics, facilities
management, and imaging groups and revenue from the newly established
information technology group.
Cost of sales for the Nine months ended September 30, 1998 increased by 54% or
$5,475.791 to $15,543,482 as compared to $10,067,691 for the same period in
1997. Operating margins were 14% and 28%, respectively for the Nine months ended
September 30, 1998 and 1997. The decrease in margins was due to high staffing
levels and start up of our information technology group.
Selling expense increased by $380,420 to $2,011,197 over the same period last
year. As a percentage of sales, selling expense was 11% and 12% for the Nine
months ended September 30, 1998 and 1997, respectively. Selling expenses are
primarily commissions based on sales.
Administrative expense for the Nine months ended September 30, 1998 increased by
$831,433 to $2,137,751 over the same period last year due primarily to increases
in administrative staffing and costs associated with the
Page 10 of 13
<PAGE>
expansion into new markets. As a percent of sales, administrative expense was
12% for the Nine month period in 1998 as compared to 9% for the same period last
year.
Net earnings (loss)
For the Nine months ended September 30, 1998 the Company incurred a net loss
of $1,125,230 as compared to net earnings of $490,566 for the same period
last year. The loss amounted to $ 0.23 basic and diluted loss per share
compared to earnings of $ 0.10 for basic and diluted for the same period last
year. Weighted average shares outstanding for the Nine months ended September
30, 1998 were 4,820,102 and 4,794,021 for September 30, 1997. The Company has
an income tax benefit of $489,000 versus an income tax expense of $364,050
for the Nine months ended September 30, 1998 and 1997, respectively.
Liquidity and Capital Resources at September 30, 1998 and Subsequent Activity
The Company has funded its expansion and growth by utilizing internally
generated cash flow and long term financing, where appropriate, for significant
capital outlays. The Company anticipates that cash flow from operations and
credit facilities will be sufficient to meet the Company's expected cash
requirements for the next twelve months. There can be no assurances that
unforeseen events may require more working capital than the Company has at its
disposal.
The Company has a secured a $2,500,000 line of credit with a financial
institution. The line of credit bears interest at the financial institution's
prime rate or the 30 day LIBOR rate plus 2.25%, payable monthly. The line of
credit will be utilized to finance accounts receivable and other working capital
needs. As of September 30, 1998 there were advances under the line that totaled
$1,061,000. The Company also has a $1,100,000 term note to refinance certain
capital leases at more favorable interest rates. The note is payable in 48
monthly installments, bears interest at the rate of 9.02%, and matures on April
30, 2001. The balance on the note at September 30, 1998 was $687,500
During the Nine months ended September 30, 1998 and 1997, the Company's
principal uses of cash were to fund fixed asset purchases, pay off long-term
debt, changes in staffing requirements and relocation costs and expenses.
Three Months ended September 1998 vs. 1997
Revenue for the three months ended September 30, 1998 increased 28% or 1,433,347
to $6,601,801 over the same period in 1997. The increase reflects increased
demand for all areas of company operations, including the new information
technology group.
Cost of Sales increased by $1,580,510 to $5,069,489 for the three months ended
September 30, 1998 compared to the same period in 1997. Principal reasons for
the increase were due to higher staffing levels as compared to the comparable
quarter and start up expenditures for the information technology group.
Selling Expenses increased $114,577 for the three months ended September 30,
1998 as compared to September 30, 1997. Selling Expenses as a percentage of
sales was 11% for the three months ended September 30, 1998 and 1997.
Administrative expenses increased 62% or $307,086 to $805,270 resulting mainly
from additional support staff and start up expenditures for the information
technology group.
Net earnings for the three months ended September 30, 1998 for the Company
declined by $505,502, which resulted in a net loss of $336,874 compared to net
earnings of $168,628 for the comparable period. Included in net earnings for the
three months ended September 30, 1998 is a tax benefit of $38,500 compared to a
tax
Page 11 of 13
<PAGE>
expense of $130,950 for the comparable period. The net loss resulted from
increases in cost of sales and administrative expenses.
Year 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the Year 2000 approaches. Management is in the
process of converting its computer systems. Maintenance or modification costs
will be expensed as incurred, while the costs associated with new computer
systems will be capitalized and amortized over the systems useful lives.
Management believes that with converting to new computer systems, the Year 2000
issue will not pose a significant operational problem.
Page 12 of 13
<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 hereunto duly authorized.
On-Site Sourcing, Inc.
----------------------
Date: Novenber 14, 1998
By:
/s/ Christopher J. Weiler
-------------------------
President and
Chief Executive Officer
By:
/s/ Alfred Duncan
-----------------------------
Vice President of Finance and
Chief Financial Officer
Page 13 of 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001012141
<NAME> ON SITE SOURCING
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 6,516,081
<ALLOWANCES> 0
<INVENTORY> 458,831
<CURRENT-ASSETS> 7,188,094
<PP&E> 4,339,550
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,663,963
<CURRENT-LIABILITIES> 1,467,991
<BONDS> 0
0
0
<COMMON> 48,246
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,663,963
<SALES> 6,601,801
<TOTAL-REVENUES> 6,601,801
<CGS> 5,376,156
<TOTAL-COSTS> 6,908,549
<OTHER-EXPENSES> 68,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (375,374)
<INCOME-TAX> (38,500)
<INCOME-CONTINUING> (336,874)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (336,874)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
