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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
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 No. 0-24875
BIOENVISION INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-3375915
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ROCKEFELLER PLAZA - SUITE 1600
NEW YORK, NEW YORK 10020
----------------------------------------
(Address of Principal Executive Offices)
(212) 445-6581
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
NONE
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the issuer's Common Stock, par value
$0.001 per share, as of September 30, 1999, was 7,249,147.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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<PAGE>
BIOENVISION INC.
FORM 10-QSB
----------
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet
September 30, 1999............................................ 3
Consolidated Statements of Operations
Three Months Ended September 30, 1999 and 1998 ............... 4
Consolidated Statements of Cash Flows
Three Months Ended September 30, 1999 and 1998 ............... 5
Notes to Consolidated Financial Statements ........................ 6
Item 2. Management's Discussion and Analysis or Plan of Operation.......... 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................... 14
SIGNATURES ................................................................. 15
2
<PAGE>
BIOENVISION INC.
(a development stage company)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
1999
-----------
ASSETS
Current assets:
Cash and cash equivalents .................................... $ --
Accounts receivable .......................................... --
-----------
Total current assets ......................................... --
Property, plant and equipment ................................... 59,304
Intangible assets ............................................... 23,797
-----------
Total assets ............................................... $ 83,101
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities ............................................. $ 2,193,252
Other liabilities - related parties ............................. 428,121
-----------
Total liabilities .......................................... 2,621,373
Stockholders' equity:
Common stock, $0.001 par value; Authorized: 25,000,000 shares;
Issued and outstanding: 7,249,096 .......................... 28,506
Additional paid-in capital ................................... 310,157
Accumulated comprehensive loss and deficit accumulated
during the development stage ............................... (2,874,772)
Cumulative translation adjustment ............................... (2,163)
-----------
Total stockholders' equity ...................................... $(2,538,272)
-----------
Total liabilities and stockholders' equity ...................... $ 83,101
===========
See accompanying notes.
3
<PAGE>
BIOENVISION INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
-------------------------
1999 1998
---------- ----------
TOTAL REVENUES ................................... $ -- $ N.A
OPERATING EXPENSES:
General and administrative expenses ........... $ 174,650
Research & development costs .................. 494,553
Interest payable .............................. 6,723
Depreciation expense .......................... 3,953
Amortization expense .......................... 320
---------- ----------
Operating loss ................................ (680,199)
Income taxes .................................. -- N.A.
---------- ----------
NET LOSS ......................................... (680,199) N.A.
========== ==========
Basic and diluted net loss per share ............. $ (0.09) $ N.A.
========== ==========
Shares used in computing basic and diluted
net loss per share ............................. 7,249,147 N.A
========== ==========
See accompanying notes.
4
<PAGE>
BIOENVISION INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30,
--------------------
1999 1998
--------- -----
OPERATING ACTIVITIES
Net loss .............................................. $(680,199) $N.A.
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities: --
Other liabilities - related party ................ 66,862
Depreciation ..................................... 3,953
Amortization ..................................... 320
Accounts receivable .............................. 1,010
Accounts payable ................................. 608,038
--------- -----
Net cash provided (used) by operating activities ...... $ (16) $N.A.
FINANCING ACTIVITIES
Purchases of property and equipment ................. --
INVESTMENT ACTIVITIES
Net proceeds from issuance of common stock .......... --
--------- -----
Net increase (decrease) in cash & cash equivalents .... (16) N.A.
See accompanying notes.
5
<PAGE>
BIOENVISION INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICES.
DESCRIPTION OF BUSINESS
The Company is a development stage, biopharmaceutical company primarily focused
in the research and development of products and technologies for the treatment
of cancer. The Company has acquired development and marketing rights to a
portfolio of four platform technologies.
The Company was incorporated as Express Finance, Inc. under the laws of the
State of Delaware on August 16, 1996 and changed its name to Ascot Group, Inc.
on August 26, 1998 and further to Bioenvision Inc. in January 1999.
BASIS OF PRESENTATION
In January 1999 the Company merged with Bioenvision, Inc, ("Old Bioenvision") a
development stage Company primarily engaged in the research and development of
products and technologies for the treatment of cancer. The transaction was
accounted for as a reorganization of companies under common control in a manner
similar to a pooling of interests as they had a common majority shareholder. All
prior period amounts have been restated to include the financial results of Old
Bioenvision.
Where mergers have been accounted for as reorganizations under common control in
a manner similar to a pooling of interests, no fair values have been attributed
to any tangible or intangible assets, including technology rights.
The financial statements expressed in pounds sterling for the three months ended
September 30, 1999 and 1998 have been restated in U.S. dollars at the prevailing
exchange rate of (pound)1.00 = $1.6471 solely for the convenience of the reader
only. These restatements should not be construed as representations that the
pound sterling amounts actually represent U.S. dollar amounts or that they could
be converted into U.S. dollars at the rate indicated or at any other rate.
The Company has incurred significant losses from operations and is not currently
generating cash from operations. The Company anticipates that it may continue to
incur significant operating losses for the foreseeable future. Operations to
date have been funded principally by equity capital and borrowings. The Company
intends to continue to fund its development expenses through additional capital
raising activities, including one or more offerings of equity and/or debt
through private placements and/or public offerings.
In particular, stockholders have approved the offering, through a private
placement, of 1,000,000 shares of 8% cumulative convertible preferred stock in
the Company. Based on its current operating plan, the Company believes that the
estimated amount of net proceeds will be sufficient to meet its cash,
operational and liquidity requirements for at least the 12 months following the
closing of such a private placement.
In addition, the Company has entered into an agreement with Glen Investments
Limited, a related party (see note 8) whereby Glen Investments Limited has
agreed to loan funds to the Company on an as-needed basis based upon previously
agreed budgets. A facility of (pound)1,000,000 ($1,647,100) is currently
available to the Company based on budgets that assume the above private
placement is successful. If the private placement proves to be unsuccessful,
Glen Investments Limited has agreed to support the Company for the forthcoming
year, subject to satisfactory review of revised budgets.
6
<PAGE>
BIOENVISION INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1999
(UNAUDITED)
The Company's ability to continue to develop its infrastructure depends upon its
ability to raise equity capital through the approved private placement, the
continuing availability of funding from Glen Investments and upon its ability to
raise other additional capital. The financial statements do not include any
adjustments that may result from this uncertainty.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates, and such differences
may be material to the financial statements.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (FAS 109). Under FAS 109,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates that will be in effect when the differences
are expected to reverse.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated
depreciation and amortization. Depreciation and amortization is provided on a
reducing balance basis at the rate of 25% per year.
INTANGIBLE ASSETS
Intangible assets consist of acquired development and marketing rights to
platform technologies. Acquired development and marketing rights are stated at
their cost less accumulated amortization. Amortization is provided on a
straight-line basis over 20 years.
RESEARCH AND DEVELOPMENT
Research and Development costs are charged to expense as incurred.
NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average number of common
shares outstanding during the periods. Diluted net loss per share is computed
using the weighted average number of common shares and potentially dilutive
common shares outstanding during the periods.
Presently exercisable options to purchase 500,000 shares of common stock have
not been included in the calculation of net loss per share as their effect would
have been anti-dilutive.
FOREIGN CURRENCY RESTATEMENT
The functional currency of the Company is pounds sterling. The functional
currency of the Company and its subsidiary, Old Bioenvision, was previously the
U.S. dollar. Following various re-organizations all historical amounts have been
restated with the adoption of pounds sterling as the functional currency. This
did not have a material impact.
7
<PAGE>
BIOENVISION INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)
SEPTEMBER 30, 1999
(UNAUDITED)
2. PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
September 30, 1999
------------------------------
(pounds sterling) (dollars)
----------------- ---------
Office equipment ....................... 1,140 1,878
Motor vehicles ......................... 67,154 110,609
------ -------
68,294 112,487
Less: accumulated depreciation ......... (32,289) (53,183)
------ -------
36,005 59,304
====== ======
3. INTANGIBLE ASSETS
September 30, 1999
------------------------------
(pounds sterling) (dollars)
----------------- ---------
Purchased technology .................. 15,541 25,598
Accumulated amortization .............. (1,093) (1,801)
------ ------
At September 30, 1999 ................. 14,448 23,797
====== ======
8
<PAGE>
BIOENVISION INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)
SEPTEMBER 30, 1999
(UNAUDITED)
4. COMMITMENTS
The Company leases its principal facilities under an operating lease
arrangement. The future minimum annual rental payments are as follows for years
ended June 30:
(pounds sterling) (dollars)
----------------- ---------
2000 .................. 18,000 29,648
2001 .................. -- --
2003 .................. -- --
2004 .................. -- --
2005 .................. -- --
Thereafter ............ -- --
------ ------
18,000 29,648
====== ======
Rent expense for the three months ended September 30, 1999 was(pound)4,500
($7,412) and for the three months ended September 30, 1998 was (pound)2,250
($3,706).
The Company uses office space for its executive offices which it receives from
its financial advisor at no cost.
5. INCOME TAXES
Due to operating losses and the inability to recognize corporation tax benefit
therefrom, there is no provision for income taxes for the three months ended
September 30, 1998 and 1999.
6. STOCKHOLDERS' EQUITY
In January 1999, the Board of Directors and stockholders approved a 1-for-15
reverse stock split. All share and per share amounts in the accompanying
financial statements have been adjusted for this stock split retroactively.
9
<PAGE>
BIOENVISION INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)
SEPTEMBER 30, 1999
(UNAUDITED)
7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 8, 1998 the Company entered to an agreement with Glen Investments
Limited, a Jersey (Channel Islands) corporation wholly owned by Kevin R. Leech,
whereby Glen Investments has agreed to loan funds to the Company on an as-needed
basis based upon previously agreed budgets. Mr. Leech is a private investor who
is also the sole owner of Phoenix Ventures Limited, a Guernsey (Channel Islands)
corporation and the holder of approximately 19% of the outstanding shares of
Common Stock of the Company. In exchange for its agreement to loan funds to the
Company, the Company issued to Glen Investments options to purchase up to
500,000 shares of Common Stock at an exercise price of $1.00 per share, all of
which options are currently exercisable. As such options were issued at an
exercise price greater than the fair value of common stock, no amount has been
included in the statement of operations to reflect the issuance of the options.
In May 1998, Bioheal Ltd., a subsidiary of the Company, entered into an
agreement with Christopher B. Wood, the Chairman of the Board and Chief
Executive Officer of the Company, to co-develop a gene marker and
immunomodulator system for use in gene therapy and related technologies. Under
the terms of the agreement, Bioheal was granted the exclusive license to make,
use and sell products derived from technology, and to utilize technical
information related to the technology to obtain patent and other proprietary
rights to products developed by Bioheal and its collaborators from the
technology for a term expiring on the date of expiration of all current and
future patents covered by the agreement, subject to earlier termination under
certain circumstances. In consideration of the licenses granted to Bioheal,
Bioheal agreed to pay to Dr. Wood, among other things, a royalty of 10% of the
gross sales revenues of all products, less any discounts or deductions for
value-added taxes. In addition, Bioheal has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
such products. Under the terms of the agreement, the pre-clinical costs are not
to exceed $1,500,000, and the clinical trial costs are not to exceed $4,000,000,
unless agreed by both parties.
8. SUBSEQUENT EVENT
During October 1999 the stockholders approved the offering, through a private
placement, of 1,000,000 shares of 8% cumulative convertible preferred stock in
the Company.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The Company was organized in August 1996 for the purpose of acting as a publicly
traded holding company for Mayhem Ltd., a United Kingdom corporation. That
purpose was never realized and prior to the change in control of the Company in
January 1999, the Company did not engage in any active trade or business. The
Company is considered a development-stage company for accounting purposes
because it has not generated any material revenues to date. Accordingly, the
Company has no relevant operating history upon which an evaluation of the
Company's performance and prospects can be made. Moreover, the Company is still
subject to all of the business risks associated with a new enterprise,
including, but not limited to, risks of unforeseen capital requirements, lack of
fully developed products, failure of market acceptance, failure to establish
business relationships, reliance on outside contractors for the manufacture and
distribution of proposed products, and competitive disadvantages as against
larger and more established companies. The likelihood of the success of the
Company must be considered in light of the development cycles of new
pharmaceutical products and technologies and the competitive and regulatory
environment in which the Company operates.
The company is an international biopharmaceutical company primarily engaged in
the research and development of products and technologies for the treatment of
cancer. During its development stage the Company has been primarily engaged in
organizational activities, including developing a strategic operating plan,
entering into various collaborative agreements for the development of products
and technologies, hiring personnel and developing and testing its products. The
Company plans to begin marketing its lead product, Modrefen, on a commercial
scale in the U.K. prior to the end of December of 1999. The Company has
assembled the core of its management team, which includes a Chairman of the
Board and Chief Executive Officer, two Senior Vice Presidents and Chief Medical
Officer.
PLAN OF OPERATION
The Company has acquired development and marketing rights to a portfolio of four
platform technologies developed over the past fifteen years, from which seven
products and five product candidates have been derived and additional products
may be developed in the future. Although the Company intends to commence
marketing its lead product, Modrefen, and to continue developing its existing
platform technologies and commercializing products derived from such
technologies, a key element of the Company's business strategy is to continue to
acquire, in-license and develop new technologies and products that the Company
believes offer unique market opportunities and/or complement the Company's
existing product lines. Once a product or technology has been launched into the
market for a particular disease indication, the Company plans to work with
numerous collaborators, both pharmaceutical and clinical, in the oncology
community to extend the labeling of the drug to other indications. In order to
market its products effectively, the Company intends to develop marketing
alliances with strategic partners and may co-promote and/or co-market in certain
territories.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
From the period of its inception through December 1998, the Company did not
engage in any active trade or business. In January 1999, the Company consummated
a merger with Old Bioenvision by effecting a 1-for-15 reverse stock split of its
then outstanding shares of Common Stock and thereafter issuing 7,013,897
post-reverse split shares of Common Stock to the former stockholders of Old
Bioenvision in exchange for all of the issued and outstanding shares of capital
stock of Old Bioenvision. Consequently, upon consummation of the merger, the
former stockholders of Old Bioenvision became the controlling stockholders of
the Company, Old Bioenvision became a wholly-owned subsidiary of the Company and
changed its name to Bionco Marketing Inc., and the Company changed its name from
Ascot Group Inc. to Bioenvision Inc.
To date, the Company has incurred significant net losses, including net losses
of $680,199 for the three months ended September 30, 1999. The Company had an
accumulated deficit of $2,876,935 as of September 30, 1999 and, since that date,
the Company has continued to incur significant and increasing losses. The
Company anticipates that it may continue to incur significant operating losses
for the foreseeable future. There can be no assurance as to whether or when the
Company will generate material revenues or achieve profitable operations. The
Company's independent public accountants included an explanatory paragraph in
their report on the Company's financial statements for the fiscal year ended
June 30, 1999, stating that certain factors raise substantial doubt about the
Company's ability to continue as a going concern.
In the three months ended September 30, 1999 administrative expenses totaled
$174,650. This represents an increase over administrative expenses for the prior
three months as a result of the Company's activities in connection with its
private placement of 8% cumulative convertible preferred stock.
Research and development expenses were $494,553 in the three months ended
September 30, 1999. This represents an increase over research and development
expenses for the prior three months as a result of the Company's increasing its
research activities during the most recent quarter in line with the development
of its products.
Based on its current operating plan, the Company believes that the estimated
minimum amount of net proceeds from its anticipated private financing will be
sufficient to meet its cash, operational and liquidity requirements for at least
12 months following the completion of such financing, and that the estimated
maximum net proceeds from such private financing will be sufficient to meet its
cash, operational and liquidity requirements for at least 18 months following
the completion thereof. The Company may, however, require additional financing
within this time frame due to unanticipated changes in economic conditions or
other unforeseen circumstances. In the event the Company's plans change or its
assumptions change or prove to be inaccurate, the Company could be required to
seek additional financing sooner than currently anticipated. The Company
currently has an agreement with Glen Investments Limited, a Jersey (Channel
Islands) company wholly owned by Kevin R. Leech (a private investor who is also
the sole owner of Phoenix Ventures Limited, the holder of approximately 19% of
the outstanding shares of Common Stock of the Company), whereby Glen Investments
has agreed to loan funds to the Company on an as-needed basis based upon
previously agreed budgets. A facility of pound one million is currently
available to the Company based on budgets that assume the above private
placement is successful. If the private placement proves to be unsuccessful,
Glen Investments Limited has agreed to support the Company for the forthcoming
year subject to satisfactory review of revised budgets. Any additional financing
may not, however, be available to the Company when needed on commercially
reasonable terms, or at all. If the Company is unable to obtain such additional
financing, the Company's operations will, in all likelihood, cease.
12
<PAGE>
YEAR 2000 ISSUE
The year 2000 issue refers to the potential failures that computer systems may
incur as a result of the date change from 1999 to 2000. Many existing computer
programs use only two digits to identify a change of the century. As a result,
computer systems using these programs may be unable to properly recognize
date-sensitive data resulting in the creation of erroneous information or system
failure.
Although the Company does not currently have any computer or other systems that
may be susceptible to the year 2000 issue, the Company's products are mostly
being developed in various research institutions which may have systems that are
not year 2000 compliant. A possible worst case year 2000 scenario for the
Company would be if the research institutions' systems failed. If their networks
fail for an extended period of time due to the year 2000 issue, the Company may
no longer be able to continue developing and testing its products. In the event
such systems are not year 2000 compliant on a timely basis, the Company will
seek to develop and test its products at institutions whose systems are year
2000 compliant. The Company has no assurance that this can be accomplished in a
timely or cost effective manner.
The Company is currently evaluating such year 2000 issues and their potential
impact on its business, and has commenced inquiries to determine the status of
preparations by the research institutions where the Company's products are
tested to become year 2000 compliant. Although the Company's management expects
to incur cots in correcting any year 2000 issues arising as a result of such
research institutions' handling of their own year 2000 issues, management cannot
currently estimate those costs. All such costs will be expensed as incurred. The
Company does not expect that the cost of addressing any year 2000 issue will be
a material event or uncertainty that would cause its reported financial
information not to be necessarily indicative of future operating results or
future financial condition, or that the costs or consequences of incomplete or
untimely resolution of any year 2000 issue represent a known material event or
uncertainty that is reasonably likely to affect its future financial results, or
cause its reported financial information not to be necessarily indicative of
future operating results or future financial condition. However, if the Company
encounters any unanticipated delays in, or costs associated with, the resolution
of any year 2000 issue, the Company's business, financial condition and results
of operations could be materially adversely affected.
13
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
14
<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.
BIOENVISION INC.
Date: November 19, 1999 By: /s/ CHRISTOPHER B. WOOD
----------------------------------
Christopher B. Wood
Chairman of the Board and
Chief Executive Officer
By: /s/ THOMAS NELSON
----------------------------------
Thomas Nelson
Chief Financial Officer
(principal financial officer and
principal accounting officer)
15
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<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 59,304
<DEPRECIATION> 3,953
<TOTAL-ASSETS> 83,101
<CURRENT-LIABILITIES> (2,193,252)
<BONDS> 0
0
0
<COMMON> 28,506
<OTHER-SE> (2,566,778)
<TOTAL-LIABILITY-AND-EQUITY> 83,101
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 673,476
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,723
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<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (680,199)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
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