<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCAHNGE ACT OF 1934
For the quarterly period ended November 30, 1997 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECRITIES EXCHANGE ACT OF 1937
For the transition period from _________ to _________
Commission file number: 000-21665
SIMULATIONS PLUS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4595609
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) identification No.)
40015 SIERRA HIGHWAY, B-110
PALMDALE, CA 93550
(Address of principal executive offices including zip code)
(805) 266-9294
(Registrant's telephone number, including area code)
NOT APPLICABLE
(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 outstanding of the Issuer's common stock, par value $0.001
per share, as of January 14, 1998, was 3,350,000.
<PAGE> 2
SIMULATIONS PLUS, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at November 30, 1997 (unaudited) 3
Consolidated Statements of Operations for the three months
ended November 30, 1997 and 1996 (unaudited) 4
Consolidated Statements of Cash Flows for the three months
ended November 30, 1997 and 1996 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operations
General 9
Results of Operations 10
Liquidity and Capital Resources 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
Exhibit Index 16
</TABLE>
2
<PAGE> 3
SIMULATIONS PLUS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
November 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents (note 2) 717,196
Investments (note 3) 917,598
Accounts receivable, net of allowance for
doubtful accounts of $15,000 243,032
Prepaid Expenses 32,414
Income tax receivable 51,596
Inventory 172,587
----------
Total Current Assets 2,134,423
----------
Capitalized computer software development costs,
net of accumulated amortization (note 7) 882,585
Furniture and equipment, net (note 4) 227,135
Other assets 7,313
==========
3,251,456
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable 60,833
Accrued payroll and other expenses 145,994
Accrued warranty and service costs 52,870
Current portion of capitalized lease obligations 27,997
----------
Total Current 287,693
liabilities
----------
Capitalized lease obligations, net of current portion 53,820
----------
Total Liabilities 341,513
----------
Shareholders' equity
Common stock: $.001 par value, authorized
20,000,000 shares, issued and outstanding
3,350,000 (note 5 & 6) 3,350
Additional paid-in capital 4,595,771
Accumulated deficit (1,689,178)
----------
Total shareholders' equity 2,909,943
==========
3,251,456
==========
</TABLE>
The accompanying footnotes are an integral part of these statements.
3
<PAGE> 4
SIMULATIONS PLUS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS For the three
months ended November 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
-------------------------
11/30/97 11/30/96
---------- ----------
<S> <C> <C>
Net sales 543,063 541,816
Cost of sales 329,363 253,570
---------- ----------
Gross Profit 213,700 288,246
---------- ----------
Operating expenses:
Selling, General & Administrative 611,886 505,037
Research and Development 137,283 30,526
---------- ----------
Total Operating Expenses 749,169 535,563
---------- ----------
Loss from operations (535,469) (247,317)
Other income (expenses):
Income from grant 75,000 17,159
Interest revenue 20,408 153
Interest expense (3,029) (17,310)
---------- ----------
Loss before provision for Income taxes (443,089) (247,315)
Provision (benefit) for income taxes 0 (38,800)
---------- ----------
Net loss (443,089) (208,515)
========== ==========
Net loss per share (0.13) (0.09)
========== ==========
Weighted Ave. # of common shares
outstanding 3,350,000 2,390,000
</TABLE>
The accompanying footnotes are an integral part of these statements.
4
<PAGE> 5
SIMULATIONS PLUS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended November 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
-------------------------
11/30/97 11/30/96
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss (443,089) (208,515)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of furniture and
equipment 8,698 7,373
Amortization of capitalized software development costs 52,227 18,619
(Increase) decrease in:
Accounts receivable 132,019 (42,571)
Inventory 50,211 6,662
Other assets (4,731) 17,852
Income tax receivable 5,830
Increase (decrease) in:
Accounts payable (79,709) 93,703
Accrued payroll and other expenses (4,715) 23,810
Accrued warranty and service costs 1,011
---------- ----------
Net cash used in operating activities (282,248) (83,067)
---------- ----------
Cash flows from investing activities:
Purchase of Investment (917,598)
Purchase of furniture and equipment (45,387) (41,147)
Capitalized computer software development cost (188,092) (131,645)
---------- ----------
Net cash used in investing activities (1,151,077) (172,792)
---------- ----------
Cash flows from financing activities:
Increase in book overdraft 31,226
Proceeds from line of credit, net 6,461
Payments on capitalized lease obligations (6,240) (4,005)
Increase in deferred offering costs (251,923)
Proceeds from notes payable 300,000
---------- ----------
Net cash provided by (used in) financing activities (6,240) 81,759
---------- ----------
Net decrease in cash (1,439,565) (174,100)
Cash, beginning of period 2,156,761 174,100
---------- ----------
Cash, end of period 717,196 0
========== ==========
</TABLE>
The accompanying footnotes are an integral part of these statements.
5
<PAGE> 6
SIMULATIONS PLUS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1: GENERAL
As contemplated by the Securities and Exchange Commission under Item 310(b) of
Regulation S-B, the accompanying financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by generally
accepted accounting principles. The interim financial data are unaudited;
however, in the opinion of Simulations Plus, Inc. (the "Company"), the interim
data include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods. Results
for interim periods are not necessarily indicative of those to be expected for
the full year.
Note 2: CASH AND CASH EQUIVALENTS
The Company maintains cash deposits at banks located in California. Deposits at
each bank are insured by the Federal Deposit Insurance Corporation up to
$100,000. As of November 30, 1997, the Company had on deposit with a
high-quality financial institution cash and cash equivalents in the amount of
$622,077 that are uninsured. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk on cash
and cash equivalents.
Note 3: INVESTMENTS
In October 1997, the Company purchased commercial notes in the aggregate amount
of $917,598 through a high-quality financial institution. These notes are all
highly rated commercial notes with the average yield of 5.942% at the time of
purchase, and mature at the different time periods. The Company has not
experienced any losses in such notes and believes it is not exposed to any
significant credit risk on the investments.
Note 4: FURNITURE AND EQUIPMENT
Furniture and equipment consist of the following:
<TABLE>
<S> <C>
Equipment $ 40,555
Computer equipment 346,324
Furniture and fixtures 43,925
Leasehold improvements 5,900
---------
436,704
Less accumulated depreciation 209,569
---------
$ 227,135
=========
</TABLE>
6
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Note 5: PROMISSORY NOTES PAYABLE
In August and September 1996, the Company entered into two Subscription
Agreements whereby the Company issued two notes in the amount of $200,000 and
$300,000, respectively, and issued 100,000 and 150,000 warrants, respectively,
to purchase shares of common stock. The warrants are exercisable at $4.00 per
share and expire five years from the date of grant. The notes were repaid upon
completion of the Company's Initial Public Offering ("IPO") in June 1997.
In December 1996 and January 1997, the Company entered into Subscription
Agreements whereby the Company issued 10% promissory notes (the "Bridge Notes")
in the aggregate amounts of $1,100,000 to certain lenders (the "Bridge Lenders")
and issued 280,000 Warrants (the "Bridge Warrants") to purchase Common Stock.
The Bridge Warrants are exercisable at $2.50 per share and expire five years
from the date of grant. The Bridge Lenders have agreed not to resell or
otherwise transfer such Bridge Warrants or the Shares of Common Stock issuable
upon exercise thereof until 365 days after the completion of the Company's IPO.
The principal and unpaid interest on the Bridge Notes were repaid after the
Company's IPO in June 1997.
Note 6: STOCKHOLDERS' EQUITY
Initial Public Offering
On June 18, 1997, the Company completed an IPO of 1,150,000 shares, resulting in
net proceeds to the Company of approximately $4,400,000 after paying
underwriters' fees and costs associated with the offering.
Issuance of Underwriters Warrant
The Company issued to the underwriters in the IPO, in consideration for $100, a
warrant to purchase 115,000 shares, at a per share exercise price of $6.00 per
share. The warrant is exercisable through June 17, 2001.
Note 7: SOFTWARE DEVELOPMENT COSTS
Software development costs are capitalized in accordance with Statement of
Financial Accounting Standards (SFAS) No. 86 "Accounting for the Cost of
Computer Software to be Sold, Leased or Otherwise Marketed." Capitalization of
software development costs begins upon the establishment of technological
feasibility and is discontinued when the product is available for sale. The
establishment of technological feasibility and the ongoing assessment for
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, technological feasibility, anticipated future gross revenues,
estimated economic life, and changes in software and hardware technologies.
Capitalized software
7
<PAGE> 8
development costs are comprised primarily of salaries and direct payroll related
costs, and the purchase of existing software to be used in the Company's
software products.
Amortization of capitalized software development costs is provided on a
product-by-product basis on the straight-line method over the estimated economic
life of the products (not to exceed three years). Management periodically
compares estimated net realizable value by product to the amount of software
development costs capitalized for that product to ensure the amount capitalized
is not in excess of the amount to be recovered through revenues. Any such excess
of capitalized software development costs to the expected net realizable value
is expensed at that time.
Note 8: Income Taxes
The Company used the liability method of accounting for income taxed pursuant to
SFAS No. 109 "Accounting for Income Taxes."
Note 9: Related Party Transactions
In connection with the company's IPO, the Company agreed to grant to its
president warrants to purchase up to 300,000 shares of the Company's common
stock. The number of warrants to be granted will be based on net income for the
year ended August 31, 1998, but cannot exceed 300,000 shares. All such warrants
granted will be exercisable for a period of five years at an exercise price of
$5.00 per share. Any difference between the price of the Company common stock
and the exercise price of $5.00 per share on the measurement date will be
recorded as an expense in accordance with APB25.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis or Plan of Operations
The following discussion should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere in this quarterly report on
Form 10-QSB for the quarter ended November 30, 1997 (the "Form 10-QSB"). In
addition to historical information, this Form 10-QSB contains forward-looking
statements. The forward-looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those discussed
in the section entitled "Management's Discussion and Analysis or Plan of
Operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. Simulations Plus, Inc. undertakes no obligation to publicly revise
these forward-looking statements, or to reflect events or circumstances that
arise after the date hereof. Readers should carefully review the risk factors
described in other documents that the Company has filed and will continue to
file from time to time with the Securities and Exchange Commission.
GENERAL
Simulations Plus, Inc. ("Simulations Plus" or the "Company") was incorporated in
1996 to develop, market and support software for the educational and
pharmaceutical industries, and to continue the operations of its wholly-owned
subsidiary, Words+, Inc., which was incorporated in 1981. Words+, Inc. develops,
markets and supports hardware and software products for persons with severe
disabilities.
Simulations Plus's existing products consist of five of its expanding series of
FutureLabTM educational simulation software titles, which were first released in
May 1997. These are Circuits for Physical Science, Gravity for Physical Science,
Universal Gravitation for Physical Science, Optics for Physical Science, and
Ideal Gas for Chemistry. The Company is currently developing additional new
titles as well as converting the titles from Visual Basic for Windows only to
Visual C++ for both Macintosh and Windows platforms. The conversion effort,
begun in May 1997, has taken longer than anticipated, but is now nearing
completion. Upon completion, the development team will accelerate the
development of new titles to expand the Company's Educational Simulation
Software product line. FutureLab(TM) software has received recognition from
Computers in Physics magazine, which declared it a winner in its eighth annual
software contest, as well as from two educational institutions who perform
rigorous educational software evaluation.
Simulations Plus is also involved in the development of simulation software for
the pharmaceutical industry. Two programs are currently under development:
HelixGen(TM) and GastroPlus(TM). HelixGen predicts the shape of the receptor
sites of certain transmembrane proteins for the purpose of analytically
determining whether new candidate drug compounds will bind to those sites.
GastroPlus predicts the rate and location of absorption of new candidate drug
compounds in the human gastro-intestinal tract for the purpose of determining
whether new candidate drug compounds will be absorbed into the blood
9
<PAGE> 10
stream from the gastro-intestinal tract. Among the Company's goals in this area
are to provide comprehensive, highly accurate simulations that can save a great
deal of time and money in the development of pharmaceutical products, and to
reduce the need for animal testing in the future.
In 1997, the Company executed a License Agreement with Therapeutic Systems
Research Laboratories, Inc. ("TSRL") to have exclusive rights to TSRL's
technology and database for drug compound absorption in animal and human test
subjects. Through the formation of this strategic alliance with TSRL, the
development costs and time for GastroPlus were significantly reduced.
The Company has not yet completed the development of any of its pharmaceutical
simulations programs, and has not yet offered any for sale; however, the
GastroPlus program is beginning final Beta testing and is expected to be
released by the end of February 1998.
Words+, Inc.' products consist of a catalog of software and hardware products
designed to provide communication and computer access for persons with severe
disabilities. The Company's most famous user is theoretical astrophysicist
Professor Stephen Hawking, author of the best-selling A Brief History of Time.
(The Company's Pegasus LITE communication device received a Computerworld
Smithsonian Finalist Award in June 1997.)
Words+, Inc. released a new software program called Abbreviate! in November
1997. It allows the user to create a personal library of frequently-used
abbreviations for use in virtually any Windows-based program. The company is
currently pursuing distribution relationships with a number of major software
manufacturers for Abbreviate!, as well as implementing an aggressive marketing
program. No assurance can be given that Words+, Inc. will be successful in
establishing such distribution relationships or, if successful, that such
distribution relationships will be on terms that are acceptable or favorable
to Words+, Inc. Abbreviate! was named PC Week magazine's "Tool of the Week"
in their December 1, 1997 issue.
10
<PAGE> 11
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996.
The following table sets forth the Company's consolidated statements of
operations (in thousands) and the percentages that such items bear to net sales:
(Due to rounding, the numbers appearing in the following table may not foot;
Please refer to the Company's consolidated statements of operations.)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
11/30/97 11/30/96
--------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 543 100.0% $ 542 100.0%
Cost of sales 329 60.6 254 46.9
--------------------------------------
Selling, general and administrative 612 112.7 505 93.2
Research and development 137 25.2 31 5.7
--------------------------------------
Total operating expenses 749 137.9 536 98.9
--------------------------------------
Loss from operations (535) (98.5) (247) (45.6)
Income from grant 75 13.8 17 3.1
Interest revenue 20 3.7 0 0
Interest expense (3) (0.6) (17) (3.1)
Provision (benefit) for taxes 0 0 (39) (7.2)
--------------------------------------
Net loss $(443) (81.6)% $(209) (38.6)%
======================================
</TABLE>
Net Sales
Net sales increased $1,000, or 0.2%, to $543,000 in the first fiscal quarter of
1998 from $542,000 in the first fiscal quarter of 1997. Words+, Inc.'s sales
decreased approximately $10,000 but this decline is offset of the $11,000 sales
generated from Simulations Plus.
Cost of Sales
Cost of sales increased $75,000, or $29.5%, to $329,000 in the first fiscal
quarter of 1998 from $254,000 in the first fiscal quarter of 1997. Management
attributes this increase is primarily to the amortization of Capitalized
Software. The sales of newly released educational simulation software have not
yet increased to a level to cover the systematic amortization of Capitalized
Software cost. The amortization cost increased $34,000, or 188.9%, to $52,000 in
the first fiscal quarter of 1998 from $18,000 in the first fiscal quarter of
1997. For Words+, hardware sales, which have a lower margin than software sales,
constituted a higher percentage of total sales in the first fiscal quarter of
1998 than in the first fiscal quarter of 1997, resulting in increased cost of
sales in the first fiscal quarter of 1998.
11
<PAGE> 12
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $107,000, or 21.2%, to
$612,000 in the first fiscal quarter of 1998 from $505,000 in the first fiscal
quarter of 1997 primarily due to the expansion of the Company's simulation
software efforts as the Company added staff and other associated overhead costs,
and due to the expansion of the sales force for Words+. A portion of the
increase was also due to higher professional fees necessary to be a public
company, increases in salaries and wages, and increased printing and advertising
costs.
Research and Development
The Company incurred approximately $163,000 of research and development costs
during the first quarter of 1997 and $31,000 was expensed. In the first quarter
of 1998, the Company incurred $325,000 of research and development costs, of
which $188,000 was capitalized and $137,000 was expensed. The 89.8% increase in
research and development expenditure from the first quarter of 1997 to the first
quarter of 1998 was due to the expanded development work on educational and
pharmaceutical simulation software begun in September 1997.
Income from Grant
During the first fiscal quarter of 1997, the Company received the final $17,000
of a $51,000 grant (Phase I) from the National Science Foundation (the "NSF") to
develop software to allow physically-disabled students to perform simulated
laboratory experiments on a computer, which became the beginning of the
development of the FutureLab(TM) series of educational simulation software. In
the first fiscal quarter of 1998, the Company received the first $75,000 of a
$300,000 grant (Phase II) from the NSF to further develop the FutureLab(TM)
series.
Interest Revenue
Interest revenue for the first fiscal quarter of 1998 increased to $20,000 from
$0 in the first fiscal quarter of 1997. This increase is primarily to the
interest earned on funds received from IPO proceeds, currently invested in
highly rated commercial notes.
Interest Expense
Interest expense for the first fiscal quarter of 1998 decreased by $14,000, or
82.4%, to $3,000 from $17,000 in the first fiscal quarter of 1997. This decrease
is attributable primarily to the decline of the finance charges incurred in the
first fiscal quarter of 1997 for the Bridge Loans, which does not exist in the
first fiscal quarter of 1998 because such Bridge Notes were repaid in June 1997.
12
<PAGE> 13
Net Loss
Net loss for the three months ended November 30, 1998 increased by $234,000, or
112.0%, to $443,000 in the first fiscal quarter of 1998 compared to $209,000 in
the first fiscal quarter of 1997. Management attributes this decline primarily
to the increase in Cost of sales, the increase in Selling, General and
Administrative expenses, and increase in Research and Development expense
compared to the three months ended November 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of capital have been cash flows from its
operations, a bank line of credit, cash loans from the officers on an as-needed
basis, and proceeds from the Company's IPO.
The Company has available a $100,000 revolving line of credit from a bank.
Interest is payable on a monthly basis at the bank's prime rate plus 3.0%. The
outstanding balance under the revolving line of credit as of November 30, 1997
and November 30, 1996 was $0 and $100,000 respectively. The revolving line of
credit is not secured by any of the assets of the Company but is personally
guaranteed by Mr. Walter S. Woltosz, the Company's Chief Executive Officer,
President and Chairman of the Board of Directors.
In 1996, the Company was awarded a $51,000 Phase I SBIR grant from the National
Science Foundation, the purpose of which was to help fund the Company's
development of educational simulation software for the school and home study
markets. In October 1997, the Company was also awarded a follow-on $300,000
Phase II grant for the same purpose, which will be paid in four equal payments
of $75,000 semi-annually. The first payment on such grant was received in
October 1997.
The Company believes that the net proceeds from the sale of the shares of Common
Stock offered in the IPO, together with existing capital and anticipated funds
from operations, will be sufficient to meet its anticipated cash needs for
working capital and capital expenditures for at least the next 13 months.
Thereafter, if cash generated from operations is insufficient to satisfy the
Company's capital requirements, the Company may have to sell additional equity
or debt securities or obtain expanded credit facilities. In the event such
financing is needed in the future, there can be no assurance that such financing
will be available to the Company, or, if available, that it will be in amounts
and on terms acceptable to the Company.
13
<PAGE> 14
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:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
14
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Simulations Plus, Inc.
Date: January 20, 1998 By: /s/ MOMOKO BERAN
-------------------------------------
Momoko Beran
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 717,196
<SECURITIES> 917,598
<RECEIVABLES> 258,032
<ALLOWANCES> 15,000
<INVENTORY> 172,587
<CURRENT-ASSETS> 2,134,423
<PP&E> 436,704
<DEPRECIATION> 209,569
<TOTAL-ASSETS> 3,251,456
<CURRENT-LIABILITIES> 287,693
<BONDS> 0
0
0
<COMMON> 3,350
<OTHER-SE> 2,906,593
<TOTAL-LIABILITY-AND-EQUITY> 3,251,456
<SALES> 543,063
<TOTAL-REVENUES> 543,063
<CGS> 329,363
<TOTAL-COSTS> 749,169
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,029
<INCOME-PRETAX> (443,089)
<INCOME-TAX> 0
<INCOME-CONTINUING> (443,089)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (443,089)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
