<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-21645
Tellurian, Inc.
-------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 22-3451918
- -------------------------------------------------- ----------
(State or other jurisdiction (IRS Employer of
incorporation or organization) Identification No.)
300K Route 17 South
Mahwah, New Jersey 07430
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (201) 529-0939
--------------
None
------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report
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 _____.
The number of shares issued of the Registrant's Common Stock, as of June 30,
1997 was 3,025,000 shares of Common Stock.
<PAGE>
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets...................................................3
June 30, 1997 (Unaudited) and
December 31, 1996
Consolidated Statements of Operations.........................................4
Three Months and Six Months ended June 30, 1997 and June 30, 1996
(Unaudited)
Consolidated Statements of Cash Flows.........................................5
Six Months ended June 30, 1997
and June 30, 1996 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)........................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................8
PART II. OTHER INFORMATION....................................................12
SIGNATURES....................................................................13
EXHIBIT 27....................................................................14
<PAGE>
TELLURIAN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
(Unaudited) (a)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 572,523 $ 1,761,186
Marketable Securities 0 968,722
Accounts Receivable, net of allowance for
doubtful accounts of $10,000 and $115,000, respectively 254,261 19,362
Inventories 379,339 287,851
Prepaid Consulting Fees 74,625 74,625
Prepaid Expenses and Other Current Assets 138,955 13,856
----------- -----------
Total Current Assets 1,419,703 3,125,602
----------- -----------
PROPERTY AND EQUIPMENT- at cost
less accumulated depreciation 2,734,894 206,176
----------- -----------
OTHER ASSETS:
Security Deposits 232,740 47,750
Prepaid Consulting Fees 23,873 62,187
Deferred Costs 0 50,000
Marketable Securities 0 1,006,664
----------- -----------
Total Other Assets 256,613 1,166,601
----------- -----------
4,411,210 4,498,379
=========== ===========
CURRENT LIABILITIES:
Accounts Payable $ 993,085 $ 49,754
Accrued Expenses 82,444 60,020
Payroll Payable 0 98,399
Payroll Taxes Payable 6,491 34,494
Consulting Fees Payable 25,000 46,594
Notes Payable 162,464 0
Notes Payable--Related Parties 496,736 496,736
Interest Payable--Related Parties 332,405 315,306
Deferred Revenue 56,008 80,448
----------- -----------
Total Current Liabilities 2,154,633 1,181,751
=========== ===========
STOCKHOLDERS' EQUITY:
Common Stock--$.01 par value
Authorized - 10,000,000 shares
Issued and Outstanding - 3,025,000 shares 30,025 30,025
Additional Paid-in Capital 6,345,387 6,345,387
Accumulated Deficit (4,118,835) (3,058,784)
----------- -----------
Total Stockholders' Equity 2,256,577 3,316,628
----------- -----------
4,411,210 4,498,379
=========== ===========
</TABLE>
(a) The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that time.
The accompanying notes are an integral part of the financial statements.
page 3
<PAGE>
TELLURIAN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 299,616 $ 542,284 $ 218,331 $ 487,386
COST OF GOODS SOLD 162,080 82,059 48,418 24,355
----------- ----------- ----------- -----------
GROSS PROFIT 137,536 460,225 119,913 463,031
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Research and Development 397,843 275,030 193,756 94,484
Selling 161,157 53,131 45,901 25,920
General and Administrative 661,210 179,897 288,373 65,359
----------- ----------- ----------- -----------
1,220,210 508,058 528,030 185,763
----------- ----------- ----------- -----------
PROFIT (LOSS) FROM OPERATIONS (1,082,674) (47,833) (408,117) 277,268
----------- ----------- ----------- -----------
OTHER INCOME AND EXPENSES:
Other Income 50,917 8,711 820 1,172
Interest Expense (3,694) (26,342) (3,694) (14,547)
Interest Expense--Related Parties (24,598) (29,546) (12,298) (14,720)
----------- ----------- ----------- -----------
22,625 (47,177) (15,172) (28,095)
----------- ----------- ----------- -----------
NET PROFIT (LOSS) (1,060,049) (95,010) (423,289) 249,173
=========== =========== =========== ===========
NET PROFIT (LOSS) PER COMMON SHARE (0.35) (0.06) (0.14) 0.16
----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,025,000 1,600,000 3,025,000 1,600,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 4
<PAGE>
TELLURIAN, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES
Net Loss ($1,106,355) ($ 95,010)
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 28,986 44,560
Changes in Assets and Liabilities
Restricted Cash 0 (112,023)
Accounts Receivable (234,899) (163,602)
Inventories (41,488) (47,232)
Prepaid Expenses and Other Current Assets (125,099) 7,811
Deferred Costs 50,000 0
Security Deposits (184,990) 925
Prepaid Consulting Fees 38,314 0
Accounts Payable 943,331 64,794
Accrued Expenses 18,728 (19,732)
Payroll Payable (98,399) 70,895
Payroll Taxes Payable (28,003) (127,678)
Consulting Fees Payable (21,594) 23,775
Interest Payable--Related Parties 17,099 29,378
Deferred Revenue (24,440) 106,605
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (768,809) (216,534)
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of Property and Equipment (2,485,240) (7,209)
Sale of Marketable Securites 1,975,386 0
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (509,854) (7,209)
----------- -----------
NET CASH FROM FINANCING ACTIVITIES:
Proceeds from notes payable 90,000 0
Proceeds from issuance of warrants in connection
with private placement 0 28,000
Proceeds from notes payable--related parties 0 25,494
Repayments of notes payable--related parties 0 (100,000)
Repayments of notes payable--other 0 (149)
Proceeds from long-term debt 0 703,000
Payments of deferred offering costs 0 (188,360)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 90,000 467,985
----------- -----------
NET CHANGE IN CASH (1,188,663) 244,242
----------- -----------
CASH-- Beginning 1,761,186 39,130
----------- -----------
CASH-- Ending 572,523 283,372
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 11,193 $ 9,000
Cash Paid for Income Taxes 0 0
SCHEDULE OF NON-CASH ACTIVITIES:
Purchase of property and equipment through issuance
of note payable 72,464 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE>
TELLURIAN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
NOTE 1--Presentation Basis
The attached summarized financial information does not include all
disclosures required to be included in a complete set of financial statements
prepared in conformity with generally accepted accounting principles. Such
disclosures were included with the financial statements of the Company at
December 31, 1996 which were included in its Form 10-K filing dated April 15,
1997. Such statements should be read in conjunction with the data herein.
NOTE 2--Interim Consolidated Financial Statements
The consolidated balance sheet of the Company at June 30, 1997 and the
consolidated statements of operations and cash flows for the three and six
months ended June 30, 1997 and 1996 are unaudited but include all adjustments
which, in the opinion of management, are necessary for the fair presentation of
the Company's financial position and results of operations for the periods then
ended. All such adjustments are of a normal recurring nature. The results of
operations for the interim periods are not necessarily indicative of the results
of operations for a full fiscal year.
NOTE 3--Minority Interest in Subsidiary
In March 1997 the Company formed a subsidiary, Cyberport Niagara, Inc.,
in the Province of Ontario, Canada, in which the Company holds an 87.5 percent
interest. No minority interest in this corporation is reflected at June 30, 1997
since the loss applicable to the minority interest exceeds the minority interest
in the equity capital of the corporation.
NOTE 4--Translation of Foreign Currency
The foreign currency financial statements of subsidiaries operating outside the
United States are translated in accordance with the requirements of the
Financial Accounting Standards Board. All income and expense accounts are
translated at average exchange rates; assets and liabilities at current exchange
rates; and stockholders equity and intercompany balances at historical rates.
Translation adjustments were accumulated but have not been included as a
separate component of equity at June 30, 1997 because they have been deemed to
be immaterial.
NOTE 5--Inventories
Inventories at June 30, 1997 consist of the following:
June 30, 1997 December 31, 1996
(Unaudited)
Raw materials $265,000 $217,663
Work-in-process 114,339 43,942
Finished Goods 0 26,246
-------- --------
$379,339 $287,851
======== ========
NOTE 6--Loss Per Common Share
Net loss per common share is based on the weighted average number of common
shares outstanding during the period.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY
RECENT DEVELOPMENTS
Cyberport
During the second quarter of 1997, the Company was able to begin conducting
operations in its 87.5% owned subsidiary, Cyberport Niagara (Cyberport).
Although the limited opening on Friday, June 27 was not done early enough to
have any noticeable impact on the revenue for the quarter, Management believes
that it was essential to open the facility in close to final form before the
tourist months of July and August arrived. While Management does not believe
that the traffic flow from the casual tourists in Niagara Falls will provide
enough revenue to ensure the viability of Cyberport, Management believes that
the exposure to the summer tourists is critical to its plans to develop the
group tour business for the fall and subsequent seasons. The exit interviews of
those people attending Cyberport have been extremely encouraging as has the
early interest shown by tour groups controlling important segments of the
Niagara Falls market.
The Company believes that its ability to operate this facility successfully
depends on elements both within and outside of its control, including the
success of its own products incorporated into this venture as well as the
competition which it faces from existing and new entrants into the tourism
market in the Niagara Falls area. Most of the competitors have more experience
than the Company in opening and managing tourist facilities and have more
financial resources than the Company. There can be no assurance that the project
will perform successfully.
The Company expects that a significant portion of its future revenues are
dependent upon the successful operation of the Cyberport facility and the sales
leads for EAGLE image generators that this venture may create.
The Virtual Reality Helmet
Management continues to be encouraged by the progress it is making in completing
the prototype helmet to be used in conjunction with its proprietary image
generators. Significant progress has been made in solving the technical problems
associated with this sound and viewing medium. A working prototype now exists,
but the Company cannot be certain that the design principles it has decided upon
will be successful in the marketplace. Further, the Company cannot be sure the
prototype can be developed into a finished product that can be manufactured at a
cost which will allow the Company to successfully market the product. Management
recognizes that many competitors are actively engaged in the design and
manufacture of products intended for this use. Many of these competitors have
more experience in helmet design and manufacturing that the Company does, and
many of these competitors have more financial resources to draw upon than the
Company has. There can be no assurance that the Company's design will be
successful, nor that the Company will find a ready market for the helmet if it
is successful.
The Company expects that, if the helmet design is successful, this medium will
replace the larger and more expensive means of delivering the video and audio
images to its customers. Management believes that, if successful, the helmet
will represent a significant portion of its future revenue.
Page 7
<PAGE>
Voyager
In January 1996, Tellurian signed a Technology Transfer Agreement with Voyager
(a Taiwanese corporation) pursuant to which Tellurian granted Voyager an
irrevocable, exclusive, assignable, fully paid license to be the exclusive
supplier of the EAGLE Image Generator in various Asian and Mid-East countries.
As of December 31, 1996 the Company was owed approximately $360,000 under this
contract and was experiencing difficulty in collecting that remaining balance.
During the second quarter of 1997 the Company received a partial payment against
the open balance and agreed with Voyager on a payment schedule which, by the end
of the third quarter of 1997, would ensure the Company of collection of the
outstanding balance which has been reduced to reflect certain costs incurred by
Voyager and certain items returned to the Company by Voyager. As of August 8,
1997, less than $12,000 remains open on this account.
Plan of Operation
The Company plans to focus its efforts on the following three areas:
1. Finding and entering into joint ventures or revenue sharing agreements with
third parties for the purpose of owning, operating and/or having an
interest in one or more Tourist Entertainment Centers (TEC) or Location
Based Entertainment Centers (LBE) for the sale and/or use of its virtual
reality game units;
2. Increasing revenues through marketing efforts of its new EAGLE product now
on display at its Cyberport facility;
3. Completing the development of its virtual reality helmet with head tracking
and establishing products utilizing the helmet technology.
Marketing of the new EAGLE image generator will be accomplished by directing
efforts towards three different customer groups:
1. the training and simulation market where Tellurian has been selling its
AT-200 unit;
2. the virtual reality game developer market through trade show exhibits,
advertisements and newsletters;
3. pursuing the interactive thrill ride market.
The Company intends to expand its customer base through trade show involvement
beginning in the third and fourth quarters of 1997 at which it can demonstrate
its EAGLE product and, if available, its helmet technology.
The Company intends to continue its ongoing research and development efforts and
to expand and enhance the technical capability, design features and range of
uses of its products.
Tellurian has designed and installed complete games units in its Cyberport
facility and intends to pursue this concept in developing future TEC or LBE
locations. Tellurian has financed the Cyberport facility utilizing a portion of
the proceeds of its recently completed public offering and is now actively
seeking investors and/or lenders to a) meet the remaining capital needs of the
venture and b) release some of Tellurian's capital to allow it to pursue
subsequent opportunities. The Company has limited experience in owning,
financing and operating such centers, and is dependent in such areas upon third
parties to assist it or participate with it in completing such centers. There
can be no assurances that the Company will be successful in establishing or
entering into revenue sharing agreements or financing agreements for Cyberport
or any other such center or that it will be able to derive profits from such
operations.
Page 8
<PAGE>
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 1997 vs. June 30, 1996
Tellurian and its' subsidiary had net sales for the three months ended June 30,
1997 of $218,331, a decrease of $269,055, or 55.2% from the comparable period of
the prior year. For the three months ended June 30, 1997, the Company's gross
profit was $119,913, a decrease of $343,118, or 74.1% from the prior year. The
principal cause of this reduction was the completion of the Voyager consulting
contract at the end of 1996. During 1997, the Company did recognize
approximately $200,000 of revenue with regard to the Voyager activity in 1996
which could not be recognized in 1996 due to the significant question regarding
the likelihood of collection which existing at that time.
Tellurian and its' subsidiary had net sales for the six months ended June 30,
1997 of $299,616, a decrease of $242,668, or 44.7% from the comparable period of
the prior year. For the six months ended June 30, 1997, the Company's gross
profit was $137,536, a decrease of $322,689, or 70.1% from the prior year. The
principal cause of this reduction was the completion of the Voyager consulting
contract at the end of 1996.
Research and development activities for the three months ended June 30, 1997 was
$193,756, representing an increase of $99,272 over the respective period of the
prior year. The increase in research and development activities related
partially to the development of the EAGLE equipment finalization for delivery to
Cyberport and to the continued development work on the virtual reality helmet.
Research and development activities for the six months ended June 30, 1997 was
$397,843, representing an increase of $122,813 over the respective period of the
prior year. The increase in research and development activities, as noted above,
relates to the development of the EAGLE equipment for Cyberport and to the work
on the virtual reality helmet.
Selling, general and administrative expenses for the three months ended June 30,
1997 were $334,274 an increase of $242,995 or 266.2% from the comparable period
of the prior year. The increases in selling, general and administrative expenses
were substantially due to the costs incurred in connection with the development
of the Cyberport facility, increased costs of professional services related to
the requirements imposed by virtue of the Company's recently concluded Initial
Public Offering, and rent on the new Company facility in Mahwah, New Jersey.
These increases were partially offset in this quarter due to the reduction of
the allowance for doubtful accounts.
Selling, general and administrative expenses for the six months ended June 30,
1997 were $822,367, an increase of $589,339 or approximately253% from the
comparable period of the prior year. The reasons for this increase in selling,
general and administrative expenses were noted in the paragraph above.
Selling, general and administrative expenses expressed as a percentage of sales
was approximately 153.1% for the three months ended June 30, 1997, an increase
of approximately 134.4% from the comparable period of the prior year. Selling,
general and administrative expenses was approximately 274% for the six months
ended June 30, 1997, an increase of 231% from the comparable period of the prior
year. The increased levels of administrative effort required as noted above
coupled with the reduced revenue due to the completion of the Voyager contract
caused this result.
For the three months ended June 30, 1997, interest expense was $15,992 as
compared to $29,267 for the comparable period of the prior year. For the six
months ended June 30, 1997, interest expense was $28,292 compared to $55,888 for
the comparable period of the prior year. This decrease was due to the repayments
of debt made following the completion of the Company's Initial Public Offering.
Page 9
<PAGE>
The Company's net loss for the three months ended June 30, 1997 was $423,289 as
compared to a profit of $249,173 for the comparable period of the prior year.
The Company's net loss for the six months ended June 30, 1997 was $1,060,049 as
compared to a loss of $95,010 for the comparable period of the prior year. The
increase in the net loss was primarily due to increases in levels of activity in
the development of Cyberport, increased cost of research and development
activities, and the loss of revenues from the Voyager contract.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997 and 1996 net cash of $768,809 and
$216,534, respectively, was used in operating activities. The net loss from
operations for the period ended June 30, 1997, $1,106,355, was partially offset
by increases in accounts payable of $943,331. The other primary uses of cash
were the increase in accounts receivable resulting from the booking of the
Voyager receivable and the increase in Other Current Assets which stems from a
large GST (a Canadian tax) receivable due to the Cyberport subsidiary. This tax
was deposited in order to import exhibits into Canada but is refundable since
the material is not for resale.
During the six months ended June 30, 1997 and 1996, net cash was used in
financing activities totaling $509,854 and 7,209 respectively. The 1997 activity
reflects additions to the Cyberport facility and exhibits partially offset by
the sale of marketable securities held by the Company at December 31, 1996.
During the six months ended June 30, 1997 and 1996, the Company received net
proceeds of $90,000 which was used to finance the purchase of property and
equipment and $467,985 from financing activities.
The Company expects to meet its liquidity and cash needs from funds generated
from operations together with the use of the available working capital. In the
event that revenues from operations are insufficient to meet cash requirements,
the Company will seek additional public or private financing. In addition,
unexpected future developments may result in the Company requiring additional
financing. There can be no assurances given that such financing, if required,
will be available, or, if available, that it can be obtained under terms
satisfactory to the Company.
The Company is concerned that a financing arrangement made with the owner of the
building leased for its Cyberport facility has not, as of the date hereof, been
honored. Under the terms of that commitment, the Company expects the landlord to
provide $1 million Canadian dollars( approximately, $725,000 U.S. dollars) of
financing for leasehold improvements made in that building. Accordingly,
management has elected to show these expenditures as leasehold improvements on
its consolidated balance sheet and to recognize the debt obligation associated
with these improvements in spite of its agreement with the owner for those
payments to be made by the owner directly to the contractors. While management
believes that the owner is legally obligated to make this payment and further
believes that the owner is financially capable of meeting this obligation, there
can be no assurance that this obligation will be met.
Page 10
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
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. Exhibits and Reports on Form 8-K:
(a) Exhibits
10.1 Lease with Niacan, Ltd.
11- Earnings per Share (see note 2)
27- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended June 30, 1997.
11
<PAGE>
L E A S E
(Commercial)
Made the 1st day of February, 1997
** B E T W E E N: 117459 Ontario, Inc.
to be assigned to
NIACAN LTD.
c.o.b. as "ECHO BUILDING"
(the "Landlord")
-and-
CYBERPORT NIAGARA, INC.
(the "Tenant")
In consideration of the rents, covenants and obligations stipulated herein, the
Landlord and the Tenant have agreed to enter into a Lease of the premises known
municipally as
** 5781 Ellen Avenue, Niagara Falls, Ontario, totalling
approximately 40,000 square feet
1. GRANT OF LEASE
(1) The Landlord leases the Premises to the Tenant
a) at the Rent set forth in Section 2;
b) for the Term set forth in Section 3;
c) subject to the conditions and in accordance with the
covenants, obligations and agreements herein.
(2) The Landlord covenants that it has the right to grant the
leasehold interest in the Premises free from encumbrances except
as disclosed on title.
2. RENT
(1) Rent means the amounts payable by the Tenant to the Landlord
pursuant to this Section and includes Additional Rent.
(2) The Tenant covenants to pay to the Landlord, during the Term of
this Lease rent as follows:
For the First two (2) years
Three Hundred Thousand Dollars ($300,000) per annum (plus 7%
G.S.T.) payable monthly in advance in equal installments of
Twenty-Five Thousand Dollars ($25,000) on the first day of
each and every month commencing on the first day of May,
1997 (base rent rebated for February and March 1997).
For the next Three (3) years
Three Hundred Sixty Thousand Dollars ($360,000) (plus 7%
G.S.T.) per annum payable monthly in advance in equal
installments of Thirty Thousand Dollars,
<PAGE>
($30,000) on the first day of each and every month
commencing on the first day of February 1999 to and until
January 31st, 2002
(3) The Tenant covenants to pay to the Landlord a deposit for the
first and last months rent in the amount of Fifty-Three Thousand,
Five Hundred Dollars ($53,500).
(4) The Tenant further covenants to pay all other sums required by
this Lease to be paid by it and agrees that all amounts payable
by the Tenant to the Landlord or to any other party pursuant to
the provisions of this Lease shall be deemed to be additional
rent ("Additional Rent") whether or not specifically designated
as such in this Lease.
(5) The Landlord and the Tenant agree that it is their mutual
intention that this Lease shall be a completely carefree net
lease for the Landlord and that the Landlord shall not, during
the Term of this Lease, be required to make any payments in
respect of the Premises other than charges of a kind personal to
the Landlord (such as income and estate taxes and mortgage
payments);
a) and to effect the said intention of the parties the Tenant
promises to pay the following expenses related to the
Premises as Additional Rent;
i) business taxes and licenses;
ii) utilities (including but not limited to gas,
electricity, water, heat, air-conditioning);
iii) services supplied to the Premises, provided that this
does not in any way oblige the Landlord to provide any
services, unless otherwise agreed in this Lease
iv) property taxes and rates, duties and assessments;
v) maintenance;
vi) insurance premiums;
vii) G.S.T.; sales tax, and any other taxes imposed on the
Landlord respecting the Rent;
viii) all other charges, impositions, costs and expenses of
every nature and kind whatsoever;
b) and if any of the foregoing charges are invoiced directly to
the Tenant, the Tenant shall pay same as and when they
become due and shall produce proof of payment to the
Landlord immediately if requested to do so;
i) but the Tenant may contest or appeal any such charges
at the Tenant's own expense;
c) and the Tenant hereby agrees to indemnify and protect the
Landlord from any liability accruing to the Landlord in
respect of the expenses payable by the Tenant as provided
for herein;
d) and if the Tenant fails to make any of the payments required
by this Lease then the Landlord may make such payments and
charge to the Tenant as Additional Rent the amounts paid by
the Landlord;
i) and if such charges are not paid by the Tenant on
demand the Landlord shall be entitled to the same
remedies and may take the same steps for recovery of
the unpaid charges as in the event of rent in arrears.
e) and if the Tenant enjoys the use of any common areas and
facilities not included in the Premises, the Tenant shall
pay his proportionate share of the foregoing expenses
relating to such common areas and facilities.
(6) Additional Rent shall be payable in monthly installments in
advance on the same dates stipulated for payment of Rent in
Section 2(2) and the Landlord shall at least once each
<PAGE>
year provide the Tenant with a statement providing such
information as may be required to calculate accurately the
amounts payable by the Tenant as Additional Rent:
a) prior to the first such statement being delivered the
payments of Additional Rent shall be based on the
Landlord's estimate of the expenses chargeable to the
Tenant;
b) in the event that any such statement indicates that the
amounts paid by the Tenant for Additional Rent are
either more or less than the amount required pursuant
to the statement then an adjusting statement shall be
delivered within thirty days;
i) and if the Tenant has overpaid in respect of
Additional Rent the adjustment may be made by pay of
reduction of the next ensuing installments of Rent.
(7) All payments to be made by the Tenant by delivery annually
at the commencement of the year of twelve (12) post-dated
cheques pursuant to this Lease delivered to the Landlord at
the Landlord's address for service set out in Section 15 or
to such other place as the Landlord may from time to time
direct in writing.
(8) The Tenant agrees to pay in advance to the Landlord at the
commencement of the Term the first and last months' Rent
payable under Section 2(2) of this Lease.
(9) All Rent in arrears and all sums paid by the Landlord for
expenses incurred which should have been paid by the Tenant
shall bear interest from the date payment was due, or made,
or expense incurred at a rate per annum equal to the prime
commercial lending rate of the Landlord's bank plus two (2)
percent.
(10) The Tenant acknowledges and agrees that the payments of Rent
and Additional Rent provided for in this Lease shall be made
without any deduction for any reason whatsoever unless
expressly allowed by the terms of this Lease or agreed to by
the Landlord in writing; and
a) no partial payment by the Tenant which is accepted by
the Landlord shall be considered as other than a
partial payment on account of Rent owing and shall not
prejudice the Landlord's right to recover any Rent
owing.
3. TERM AND POSSESSION
(1) The Tenant shall have possession of the Premises for a period of five
(5) years, commencing on the 1st day of February, 1997 and ending on
the 31st day of January, 2002, (the "Term").
(2) Subject to the Landlord's rights under this Lease, and as long as the
Lease in good standing the Landlord covenants that the Tenant shall
have quiet enjoyment of the Premises during the Term of this Lease
without any interruption or disturbance from the Landlord or any other
person or persons lawfully claiming through the Landlord.
(3) If the Tenant fails to take possession of the Premises or to open for
business on or before the date specified for commencement of the Term
of this Lease, the Landlord shall, in addition to any other remedies,
have the right to terminate this Lease upon 24 hours written notice to
the Tenant, and to recover from the Tenant the cost of any work done
by the Landlord on behalf of the Tenant.
(4) If for reasons beyond the Landlord's control, vacant possession of the
Premises cannot be given to the Tenant on the commencement date of the
Term of the Lease, the Lease shall remain in effect but the Tenant
shall not be required to pay Rent until the date when possession is
actually given to the Tenant:
<PAGE>
a) but if possession is not given within ninety (90) clear days from
the commencement date of this Lease either party may terminate
this Lease by written notice to the other;
b) and any delay in the actual occupation by the Tenant of the
Premises shall not extend the Term of the Lease.
4. ASSIGNMENT
(1) The Tenant shall not assign this Lease or sublet the whole or any part
of the Premises unless he first obtains the consent of the Landlord in
writing, which consent shall not unreasonably be withheld:
a) and the Tenant hereby waives its right to the benefit of any
present or future Act of the Legislature of Ontario which would
allow the Tenant to assign this Lease or sublet the Premises
without the Landlord's consent.
(2) The consent of the landlord to any assignment or subletting shall not
operate as a waiver of the necessity for consent to any subsequent
assignment or subletting.
(3) Any consent granted by the Landlord shall be conditional upon the
assignee, sublessee or occupant executing a written agreement directly
with the Landlord agreeing to be bound by all the terms of this Lease
as if the assignee, sublessee or occupant had originally executed this
Lease as Tenant.
(4) If the Party originally entering into this Lease as Tenant, or any
party who subsequently becomes the Tenant by way of assignment or
sublease or otherwise as provided for in this Lease, is a corporation
then:
a) the Tenant shall not be entitled to deal with its authorized or
issued capital or that of an affiliated company in any way that
results in a change in the effective voting control of the Tenant
unless the Landlord first consents in writing to the proposed
change;
b) if any change is made in the control of the Tenant corporation
without the written consent of the Landlord then the Landlord
shall be entitled to treat the Tenant as being in default and to
exercise the remedies stipulated in paragraph 10(2) of this Lease
and any other remedies available in law;
c) the Tenant agrees to make available to the Landlord or its
authorized representatives the records of the Tenant for
inspection at reasonable times.
5. USE
(1) During the Term of this Lease the Premises shall not be used for any
purpose other than the operation of an interactive entertainment
center and a fast food restaurant, without the express consent of the
Landlord given in writing.
(2) The Tenant shall not do or permit to be done at the Premises anything
which may:
a) constitute a nuisance;
b) cause damage to the Premises;
c) cause injury or annoyance to occupants of neighbouring premises;
d) make void or voidable any insurance upon the Premises;
e) constitute a breach of any by-law, statute, order or regulation
of any municipal, provincial, or other competent authority
relating to the Premises;
<PAGE>
6. REPAIR AND MAINTENANCE
(1) The Tenant covenants that during the term of this Lease and any
renewal thereof the Tenant takes and holds possession on an "as is"
basis and shall keep in good condition the Premises including all
alterations and additions made thereto and shall, with or without
notice, promptly make all needed repairs and all necessary
replacements as would a prudent owner including repairs attributable
to reasonable wear and tear.
(2) The Tenant shall permit the Landlord or a person authorized by the
Landlord to enter the Premises to examine the condition thereof and
view the state of repair at reasonable times:
a) and if upon such examination repairs are found to be necessary,
written notice of the repairs required shall be given to the
Tenant by or on behalf of the Landlord and the Tenant shall make
the necessary repairs within the time specified in the notice;
b) and if the Tenant refuses or neglects to keep the Premises in
good repair, the Landlord may, but shall not be obliged to make
any necessary repairs, and shall be permitted to enter the
Premises, by its officers or directors, its servants or agents,
for the purpose of effecting the repairs without being liable to
the Tenant for any loss, damage or inconvenience to the Tenant in
connection with the Landlord's entry and repairs;
i) and if the Landlord makes repairs the Tenant shall pay the
cost of them immediately as Additional Rent.
(3) Upon the expiry of the Term or other determination of this Lease, the
Tenant agrees peaceably to surrender the Premises, including any
alterations or additions made thereto, to the Landlord in a state of
good repair, reasonable wear and tear and damage by fire, lightning,
and storm only accepted.
(4) The Tenant shall immediately give written notice to the Landlord of
any substantial damage that occurs to the Premises from any cause.
7. ALTERATIONS AND ADDITIONS
(1) If the Tenant, during the Term of this Lease or any renewal of it,
desires to make any alterations or additions to the Premises,
including but not limited to: erecting partitions, attaching
equipment, and installing necessary furnishings or additional
equipment of the Tenant's business, the Tenant may do so at its own
expense, at any time and from time to time, if the following
conditions are met:
a) any and all alterations or additions to the Premises made by the
Tenant must comply with all applicable building code standards
and by-laws of the municipality in which the Premises are
located.
(2) The Tenant shall be responsible for and pay the cost of any
alterations, additions, installations, or improvements that any
governing authority, municipal, provincial or otherwise, may require
to be made in, or, or to the Premises.
(3) The Tenant agrees, at its own expense and by whatever means may be
necessary, immediately to obtain the release or discharge of any
encumbrance that may be registered against the Landlord's property in
connection with any additions or alterations to the Premises made by
the Tenant or in connection with any other activity of the Tenant.
(4) If the Tenant has complied with its obligations according to the
provisions of this Lease, the Tenant may remove its Trade Fixtures at
the end of the Term or other termination of this Lease
<PAGE>
and the Tenant covenants that he will make good and repair or replace
as necessary any damage caused to the Premises by the removal of the
Tenant's Trade Fixtures.
(5) Other than provided in paragraph 7 (6) above, the Tenant shall not,
during the Term of this Lease or anytime thereafter remove from the
Premises any Trade Fixtures or other goods and chattels of the Tenant
except in the following circumstances:
a) the removal is in the ordinary course of business;
b) the Trade Fixture has become unnecessary for the Tenant's
business or is being replaced by a new or similar Trade Fixture;
or
c) the Landlord has consented in writing to the removal;
but in any case, the Tenant shall make good any damage caused to the
Premises by the installation or removal of any Trade Fixtures, equipment,
partitions, furnishings and any other objects whatsoever brought onto the
Premises by the Tenant.
(6) The Tenant shall at its own expense, if requested by the Landlord,
remove any or all additions or improvements made by the Tenant to the
Premises during the Term and shall repair all damage caused by the
installation or the removal or both.
(7) The Tenant shall not bring onto the Premises or any part of the
Premises any machinery, equipment or any other thing that might in the
opinion of the Landlord, by reason of its weight, size or use, damage
the Premises or overload the floors of the Premises;
a) and if the Premises are damaged or overloaded the Tenant shall
restore the Premises immediately or pay to the landlord the cost
of restoring the Premises.
8. INSURANCE
(1) During the Term of this Lease and any renewal thereof the Tenant shall
take out and maintain at its own cost and expense and in the names of
the Tenant and the Landlord, as their respective interests may appear,
the following insurance coverage's with such insurers and in such
forms as the Landlord may reasonably approve (including 30 day notice
of cancellation clause):
a) insurance covering the Leased Premises and the contents thereof
and the leasehold improvements thereto in an amount of not less
than Three Million Dollars ($3,000,000) thereof with coverage
including standard extended coverage including earthquake (if
reasonably available), flood, collapse, and impact from aircraft;
b) comprehensive form boiler and machinery insurance on a blanket
repair and replacement basis with limits for each accident in an
amount for not less than the replacement cost of the Leased
premises and the contents thereof and improvements thereto
including all leasehold improvements and of all boilers, pressure
vessels, air-conditioning equipment and miscellaneous electrical
apparatus;
c) public liability and property damage insurance written on a
comprehensive basis with limits of not less than Two Milliion
Dollars ($2,000,000), per occurrence (or such higher limits as
the Landlord may reasonably require from time to time) with
severability of interest and cross-liability clauses and which
must be primary and noncontributory;
d) "All Risks" Tenant's legal liability insurance for the full
replacement cost of the Leased Premises; and
<PAGE>
e) any other form of insurance as the Landlord may reasonalby
require; provided such insurance is ordinarily maintained by
prudent owners or tenants of similar type premises.
(2) The Tenant covenant to keep the Landlord indemnified against all
claims and demands whatsoever by any person, whether in respect of
damage to person or property, arising out of or occasioned by the
maintenance, use, or occupancy of the Premises or the subletting or
assignment of same or any part thereof. And the Tenant further
covenants to indemnify the Landlord with respect to any encumbrance on
or damage to the Premises occasioned by or arising from the act,
default, or negligence of the Tenant, its officers, agents, servants,
employees, contractors, customers, invitees, or licensees:
a) and the Tenant agrees that the foregoing indemnity shall survive
the termination of this Lease notwithstanding any provisions of
this Lease to the contrary.
(3) The Tenant shall carry insurance in its own name to provide coverage
with respect to the risk of business interruption to an extent
sufficient to allow the Tenant to meet its ongoing obligations to the
Landlord and to protect the Tenant against loss of revenues.
(4) The Tenant, if requested, must deposit with the Landlord proper
Certificates of Insurance with respect to all insurance coverage
required to be maintained by the Tenant from time to time.
9. DAMAGE TO THE PREMISES
(1) If the Premises or the building in which the Premises are located, are
damaged or destroyed, in whole or in part, by fire or other peril,
then the following provisions shall apply:
a) if the damage or destruction renders the Premises unfit for
occupancy and impossible to repair or rebuild using reasonable
diligence within 120 clear days from the happening of such damage
or destruction, then the Term hereby granted shall cease from the
date the damage or destruction occurred, and the Tenant shall
immediately surrender the remainder of the Term and give
possession of the Premises to the Landlord, and the Rent from the
time of the surrender shall abate;
b) if the Premises can with reasonable diligence be repaired and
rendered fit for occupancy within 120 days from the happening of
the damage or destruction, but the damage renders the Premises
wholly unfit for occupancy, then the rent hereby reserved shall
not accrue after the day that such damage occurred, or while the
process of repair is going on and the Landlord shall repair the
Premises with all reasonable speed, and the Tenant's obligation
to pay Rent shall resume immediately after the necessary repairs
have been completed; and
c) if the leased Premises can be repaired within 120 days as
aforesaid, but the damage is such that the leased Premises are
capable of being partially used, then until such damage has been
repaired, the Tenant shall continue in possession and the Rent
shall abate proportionately.
(2) Any question as to the degree of damage or destruction or the period
of time required to repair or rebuild shall be determined by an
architect retained by the Landlord.
(3) Apart from the provisions of Section 9(1) there shall be no abatement
from a reduction of the Rent payable by the Tenant, nor shall the
Tenant be entitled to claim against the Landlord for any damages,
general or special, caused by fire, water, sprinkler systems,
<PAGE>
partial or temporary failure or stoppage of services or utilities
which the Landlord is obliged to provide according to this Lease, from
any cause whatsoever.
10. SECURITY AGREEMENT
(1) All of the Tenant's obligations under the Lease shall be secured by a
fixed and floating charge of all the Tenant's assets used in
connection with the business to be conducted at the Leased Premises.
11. ACTS OF DEFAULT AND LANDLORD'S REMEDIES
(1) An Act of Default has occurred when:
a) the Tenant has failed to pay Rent for a period of 15 consecutive
days, regardless of whether demand for payment has been made or
not;
b) the Tenant has breached its covenants or failed to perform any of
its obligations under this Lease; and
i) the Landlord has given notice specifying the nature of the
default and the steps required to correct it; and
ii) the Tenant has failed to correct the default as required by
the notice;
c) the Tenant has;
i) become bankrupt or insolvent or made an assignment for the
benefit of Creditors;
ii) had its property seized or attached in satisfaction of a
judgment;
iii) had a receiver appointed;
iv) committed any act or neglected to do anything with the
result that a Construction Lien or other encumbrance is
registered against the Landlord's property;
v) without the consent of the Landlord, made or entered into an
agreement to make a sale of its assets to which the Bulk
Sales Act applies;
vi) action if the Tenant is a corporation, with a view to
winding up, dissolution or liquidation;
d) any insurance policy is canceled or not renewed by reason of the
use or occupation of the Premises, or by reason of non-payment of
premiums;
e) the Premises:
i) become vacant or remain unoccupied for a period of 30
consecutive days;
ii) are not open for business on more than thirty (30) business
days in any twelve (12) month period or on any twelve (12)
consecutive business days;
iii) are used by any other person or persons, or for any other
purpose than as provided for in this Lease without the
written consent of the Landlord.
(2) When an Act of Default on the part of the Tenant has occurred:
a) the current month's rent together with the next three months'
rent shall become due and payable immediately; and
b) the Landlord shall have the right to terminate this Lease and to
re-enter the Premises and deal with them as it may choose.
(3) If, because an Act of Default has occurred, the Landlord exercises its
right to terminate this Lease and re-enter the Premises prior to the
end of the Term, the Tenant shall nevertheless be liable for payment
of Rent and all other amounts payable by the Tenant in
<PAGE>
accordance with the provisions of this Lease until the Landlord has
re-let the Premises or otherwise dealt with the Premises in such
manner that the cessation of payments by the Tenant will not result in
loss to the Landlord;
a) and the Tenant agrees to be liable to the Landlord until the end
of the Term of this Lease for payment of any difference between
the amount of Rent hereby agreed to be paid for the Term hereby
granted and the Rent any new tenant pays to the Landlord.
(4) The Tenant covenants that notwithstanding any present or future Act of
the Legislature of the Province of Ontario, the personal property of
the Tenant during the term of this Lease shall not be exempt from levy
by distress for Rent in arrears;
a) and the Tenant acknowledges that it is upon the express
understanding that there should be no such exemption that this
Lease is entered into, and by executing the Lease:
i) the Tenant waives the benefit of any such legislative
provisions which might otherwise be available to the Tenant
in the absence of this agreement; and
ii) the Tenant agrees that the Landlord may plead this covenant
as an estoppel against the Tenant if an action is brought to
test the Landlord's right to levy distress against the
Tenant's property.
(5) If, when an Act of Default has occurred, the Landlord chooses not to
terminate the Lease and re-enter the Premises, the Landlord shall have
the right to take any and all necessary steps to rectify any or all
Acts of Default of the Tenant and to charge the costs of such
rectification to the Tenant and to recover the costs as Rent.
(6) If, when an Act of Default has occurred, the Landlord chooses to waive
its right to exercise the remedies available to him under this Lease
or at law, the waiver shall not constitute condonation of the Act of
Default, nor shall the waiver be pleaded as an estoppel against the
Landlord to prevent its exercising its remedies with respect to a
subsequent Act of Default:
a) no covenant, term, or condition of this Lease shall be deemed to
have been waived by the Landlord unless the waiver is in writing
and signed by the Landlord.
12. RENEWAL OPTIONS
It is understood that this offer to Lease is to include two (2) five
(5) year renewal options at terms to be mutually agreed to and the Tenant is to
give six (6) months written notice to the Landlord if not renewing the Lease.
(1) the Tenant agrees to permit the Landlord during the last three (3)
months of the Term of this Lease to display "For Rent" or "For Sale"
signs or both at the Premises and to show the Premises to prospective
new tenants or purchasers and to permit anyone having written
authority of the Landlord to view the Premises at reasonable hours.
(2) if the Tenant remains in possession of the Premises after termination
of this Lease as aforesaid and if the Landlord then accepts rent for
the Premises from the Tenant, it is agreed that such overholding by
the Tenant and acceptance of Rent by the Landlord shall create a
monthly tenancy only but the tenancy shall remain subject to all the
terms and conditions of this Lease except those regarding the Term.
<PAGE>
13. ARBITRATION CLAUSE: re: Renewal of Rent
If the parties cannot agree on the amount of rent in the renewal Lease,
the rent shall be determined by the award of a majority of three arbitrators:
one named by the Landlord, one by the Tenant at least sixty days before the
expiration of the term, and the third to be selected or chosen by the two
arbitrators within seven days after their appointment. The award of a majority
of the arbitrators shall be made not more than twenty-one days before the
expiration of the then existing term. The expense of the arbitrator shall be
borne equally by the Landlord and Tenant. If either the Landlord or the Tenant
fails to name its arbitrator within the time limited or to proceed with the
arbitration, the arbitrator named by the other party may fix the rent for the
then next ensuing term and his award shall be final and binding on the Landlord
and the Tenant.
And in any event the Tenant shall not pay less rent than paid in year
five of the current lease.
14. ACKNOWLEDGEMENT BY TENANT
(1) The Tenant agrees that it will at any time or times during the Term,
upon being given at least forty-eight (48) hours prior written notice,
execute and deliver to the Landlord a statement in writing certifying:
a) that this Lease is unmodified and is in full force and effect (or
if modified stating the modifications and confirming that the
Lease is in full force and effect as modified);
b) the amount of Rent being paid;
c) the dates to which Rent has been paid;
d) other charges payable under this Lease which have been paid;
e) particulars of any prepayment of Rent or security deposits; and
f) particulars of any subtenancies
15. SUBORDINATION AND POSTPONEMENT
(1) This Lease and all the rights of the Tenant under this Lease are
subject and subordinate to any and all charges against the land,
buildings, or improvements of which the premises form part, whether
the charge is in the nature of a mortgage, trust deed, lien, or any
other form of charge arising from the financing or re-financing,
including extensions or renewals, of the Landlord's interest in the
property.
(2) Upon the request of the Landlord the Tenant will execute any form
required to subordinate this Lease and the Tenant's rights to any such
charge, and will, if required, attorn to the holder of the charge.
(3) No subordination by the Tenant shall have the effect of permitting the
holder of any charge to disturb the occupation and possission of the
Premises by the Tenant as long as the Tenant performs his obligations
under this Lease.
16. NOTICE
(1) Any notice required or permitted to be given by one party to the other
pursuant to the terms of this Lease may be given
To the Landlord at: 5400 Robinson Street
Niagara Falls, Ontario
L2J 3E1
<PAGE>
To the Tenant at the Premises or at: 5781 Ellen Avenue
Niagara Falls, Ontario
L2E 6T3
(2) The above addresses may be changed at any time by giving ten (10) days
written notice.
(3) Any notice given by one party to the other in accordance with the
provisions of this Lease shall be deemed conclusively to have been
received on the date delivered if the notice is served personlly or
seventy-two (72) hours after mailing if the notice is mailed.
17. REGISTRATION
(1) The Tenant shall not at any time register notice of or a copy of this
Lease on title to the property of which the premises form part without
consent of the Landlord.
18. INTERPRETATION
(1) This agreement shall enure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto.
(2) The words importing the singular number only shall include the plural,
and vice versa, and word importing the masculine gender shall include
the feminine gender, and words importing persons shall include firms
and corporations, and vice versa.
(3) Unless the context otherwise requires the word "Landlord" and the word
"Tenant" wherever uses herein whall be construed to include the
executors, administrators, successors, and assigns of the Landlord and
Tenant, respectively.
(4) When there are two or more Tenants bound by the same covenants herein
contained, their obligation shall be joint and several.
IN WITNESS of the foregoing covenants, the Landlord and the Tenant have executed
this Lease.
NIACAN LTD
c.o.b. as "ECKO BUILDING"
____________________________________________
Ashak Merani, (Landlord)
I have the authority to bind the corporation
CYBERPORT NIAGARA, INC
___________________________________________
Michael Hurd, (Tenant)
I have the authority to bind the corporation
<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.
TELLURIAN, INC.
_________________________________
(Registrant)
Dated: August 14, 1997 ________________________________
/s/ Stuart French, President
_________________________________
s/ Michael Hurd, Chief Financial
and Accounting Officer
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED BALANCE SHEET AS OF JUNE 30, 1997 AND STATEMENT OF
OPERATIONS FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 572,523
<SECURITIES> 0
<RECEIVABLES> 264,261
<ALLOWANCES> 10,000
<INVENTORY> 379,339
<CURRENT-ASSETS> 1,419,703
<PP&E> 2,833,765
<DEPRECIATION> 98,871
<TOTAL-ASSETS> 4,411,210
<CURRENT-LIABILITIES> 2,154,633
<BONDS> 0
0
0
<COMMON> 30,025
<OTHER-SE> 2,226,552
<TOTAL-LIABILITY-AND-EQUITY> 4,411,210
<SALES> 299,616
<TOTAL-REVENUES> 299,616
<CGS> 162,080
<TOTAL-COSTS> 162,080
<OTHER-EXPENSES> 1,220,210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,292
<INCOME-PRETAX> (1,060,049)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,060,049)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,060,049)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
