U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- ------- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission file number: 001-13467
COMMONWEALTH BIOTECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Virginia 56-1641133
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
911 East Leigh Street, Suite G-19, Richmond, Virginia 23219
(Address of principal executive offices)
(804) 648-3820
(Issuer's telephone number)
-----------------------------------------
Check mark whether the registrant: (1) has 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
As of May 15, 1998, 1,620,514 shares of Common Stock, no par value, of
the registrant were outstanding.
Transitional Small Business Disclosure Format (Check one) Yes:
No: X
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
Commonwealth Biotechnologies, Inc.
Condensed Balance Sheet
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
Unaudited -----------------
---------------
<S> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 5,559,767 $ 6,273,765
Accounts Receivable 149,432 153,090
Interest Receivable - 137
Prepaid Expenses 8,921 56,174
Inventory 21,799 6,799
------------ -----
Total Current Assets $ 5,739,919 $ 6,489,965
------------ -----------
Property Plant and Equipment, net $ 2,063,564 $ 1,435,812
------------ -----------
Other Assets
Restricted Cash $ 3,533,674 $ -
Bond Issue Cost, net 232,814 -
Organizational Costs, net 241 829
Deposits 5,000 5,000
------------ -----
Total Other Assets $ 3,771,729 $ 5,829
------------ -------
Total Assets $11,575,212 $ 7,931,606
------------ -----------
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 259,820 $ 279,570
Interest Payable 10,559 -
Current Portion Long Term Debt 30,000 30,000
Demand Note 299,680 314,680
------------ -----------
Total Current Liabilities $ 600,059 $ 624,250
------------ -----------
Long Term Debt Bonds $ 4,000,000 $ -
------------ ----------
Total Liabilities $ 4,600,059 $ 624,250
------------ -----------
SHAREHOLDERS EQUITY
Common Stock, no par value
10,000,000 authorized, 1,620,514
shares issued and outstanding
at March, 31 1998 and December
31, 1997 $ 760 $ 760
Additional Paid-in-Capital 8,761,704 8,761,704
Retained Earnings (Deficit) (1,787,311) (1,455,108)
------------ ------------
Total Stockholders Equity $ 6,975,153 $ 7,307,356
------------ -----------
Total Liabilities and Stockholders Equity $11,575,212 $ 7,931,606
------------ -----------
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Commonwealth Biotechnologies, Inc.
Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,1998 March 31,1997
------------- --------------
<S> <C>
Cash flows from operating activities
Net Income (Loss) $ (332,203) $ 251,306
Adjustments to reconcile net income (loss) to
net cash provided by (used by) operating
activities:
Depreciation and amortization 69,233 25,787
Loss on disposal of equipment 11,275 -
Interest earned on restricted cash (3,824) -
Changes in:
Accounts receivable 3,795 (121,475)
Prepaid expenses 47,253 (850)
Inventory (15,000) -
Customer deposits - 35,000
Deferred revenue - (200,000)
Accounts payable and accrued expenses (9,191) (5,180)
----------- ----------
Net cash provided by (used in) opeating activities $ (228,662) $ (15,412)
----------- ----------
Cash flows from investing activities
Purchases of property plant and equipment $ (317,150) $(198,128)
----------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt $ - $ 195,317
Shareholder distribution - (22,524)
Bond issue costs (153,186) -
Principal payments on long-term debt (15,000) (37,293)
----------- ----------
Net cash provided by financing activities $ (168,186) $ 135,500
----------- ---------
Net decrease in cash and cash equivalents $ (713,998) $ (78,040)
Cash and cash equivalents, beginning of year $6,273,765 $ 260,357
----------- ---------
Cash and cash equivalents, end of year $5,559,767 $ 182,317
=========== ==========
Supplemental Disclosures
Cash paid for interest $ 7,370 $ 5,324
=========== ==========
</TABLE>
During the quarter ended March 31, 1998, the Company issued long-term bonds in
the amount of $4,000,000. Of this amount, approximately $390,150 was invested in
land and $80,000 was expended on bond issuance costs. The remainder of the
funds, including accumulated interest income of approximately $3,824, is
maintained in other assets as restricted cash. These bonds will mature between
March 15, 2001 and March 15, 2012, interest will accrue at annual rates from
5.20% to 6.30%
See accompanying notes to condensed financial statements.
<PAGE>
Commonwealth Biotechnologies, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31 1998 March 31, 1997
------------- --------------
<S> <C>
REVENUE
Laboratory Services $ 309,813 $ 226,417
Contract Research 140,436 325,744
Grants 48,988 51,415
----------- ---------
Total Revenue $ 499,237 $ 603,576
----------- ---------
COST AND EXPENSES
Cost of Services $ 255,722 $ 177,999
Sales, Gen. And Admin. 537,064 100,094
Research and Development 102,992 69,016
----------- ---------
TOTAL COST AND EXPENSES $ 895,778 $ 347,109
----------- ---------
OPERATING INCOME (LOSS) $ (396,541) $ 256,467
----------- ---------
OTHER INCOME (EXPENSES)
Interest Expense (18,301) (5,324)
Interest Income 82,639 163
----------- ---------
Total Other Income (Expense) $ 64,338 $ (5,161)
----------- ----------
NET INCOME (LOSS) $ (332,203) $ 251,306
----------- ---------
Earnings (loss) per share basic and diluted $ (0.205) $ 3.526
Weighted average common shares outstanding $1,620,514 71,273
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
Notes To Condensed Financial Statements
(1) In the opinion of the Company, the accompanying condensed financial
statements which are unaudited, except for the condensed balance
sheet dated December 31, 1997 contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the
financial position as of March 31, 1998 and December 31 1997 and
the results of operations and cash flows for the three months ended
March 31 1998 and 1997.
(2) The results of operations for the three months ended March 31, 1998
and 1997 are not necessarily indicative of the results to be
expected for the full year.
(3) Earnings (loss) per share: The Company follows the guidance
provided in FASB Statement No. 128, Earnings Per Share, which
establishes standards for computing and presenting earnings per
share and applies to entities with publicly held common stock or
potential common stock. Those entities that have only common stock
outstanding are required to present basic earnings per share
amounts. All other entities are required to present basic and
diluted per share amounts. Diluted per share amounts assume the
conversion, exercise or issuance of all potential common stock
instruments such as options, warrents and convertible securities,
unless the effect is to reduce a loss or increase earnings per
share. At March 31, 1998 the Company had stock options outstanding
which were antidilutive, at March 31, 1997 there were no options
outstanding, therefore basic and diluted earnings (loss) per share
are equal.
(4) During the quarter ended March 31, 1998, the Company issued
long-term bonds in the amount of $4,000,000. Of this amount
approximately $390,150 was invested in land and $80,000 was
expended on bond issuance costs. The remainder of the funds,
including accumulated interest income of approximately $3,824, is
maintained in other assets as restricted cash. These bonds will
mature between March 15, 2001 and March 15, 2012, interest will
accrue at annual rates from 5.20% to 6.30%.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following should be read in conjunction with Company's Financial
Statements and Notes thereto included herein.
Overview
The Company's revenues are derived principally from providing
protein/peptide and DNA/RNA chemistries and related analytical services to
researchers in the biotechnology industry. The biotechnology industry has
experienced rapid growth in recent years based on the development of innovative
technologies. The development process requires sophisticated laboratory
techniques. Many participants in the industry do not have the facilities or
personnel necessary to perform these techniques, and contract it out to the
Company and other organizations. Since commencing operations in 1992, the
Company has experienced significant growth in revenues as the Company's
reputation has grown.
In general terms, the Company serves two types of customers: those who
require a discrete set of services ("short-term projects"), and those who
contract with the Company on an extended basis for performance of a variety of
integrated services ("long-term projects"). More often than not, short-term
customers send the Company repeat business. For the purpose of consistency, the
term "Laboratory Services" is used to describe revenue associated with
short-term projects, and the term "Contract Services" is used to describe
revenue associated with long-term projects. As the Company goes forward, the
terms Laboratory Services and Contract Services will be replaced with short-term
project and long-term project revenues.
Revenues
Gross revenues decreased in the first quarter of 1998 (the "1998
Quarter") by $104,339 or 17.3%, from $603,576 in the first quarter of 1997 (the
"1997 Quarter") to $499,237 in the 1998 quarter.
Revenues realized from laboratory services increased $83,396, or 36.8%,
from $226,417 in 1997 quarter to $309,813 in the 1998 quarter. Revenues from DNA
sequence analysis increased by $95,082 or 102.4% from $187,956 in the 1998
quarter compared to $92,874 in the 1997 quarter. Revenues attributable to
peptide synthesis decreased by $15,142, or 24.2%, from $62,663 in the 1997
quarter to $47,521 in the 1998 quarter. Revenues from protein sequence analysis
increased by $11,545, or 47.9%, from $12,580 in the 1997 quarter to $24,125 in
the 1998 quarter, while revenues from amino acid analysis decreased by $11,110,
or 91.7%, from $24,610 in the 1997 quarter to $13,500 in the 1998 quarter.
<PAGE>
Revenues realized from various contract research projects decreased by
$185,308, or 56.9%, from $325,744 in the 1997 quarter to $140,436 in the 1998
quarter. This decrease is primarily due to the successful completion of several
research contracts in the last quarter of 1997 which have not been renewed, and
to the delay in the start of new research contracts for 1998.
The Company also experienced a decrease in revenue realized from
government grants in the amount of $2,427, or 4.7%, from $51,415 in the 1997
quarter to $48,988 in the first quarter in 1998. On-going grants through 1998 to
the Company are from the National Institutes of Health (NIH) and the United
States Department of Agriculture (USDA). The Company has made application for
three new research grants from the NIH and for a Phase II SBIR grant from the
USDA; the Company has so far received notice that one of its new SBIR Phase I
applications to the NIH is likely to be funded for $ 100,000 for the period
April 1,1998 - September 30,1998. Government grants are expense reimbursement
grants which provide for reimbursement of the Company's direct costs incurred,
plus indirect costs as a percentage of direct costs. The Company generally
receives grant payments semi-monthly, with the amount of each payment being
determined by the amount of the costs incurred in the immediately preceding two
week period.
The Company experiences quarterly fluctuations in revenues which arise
primarily from variations in research contracts. Revenue fluctuations also
result from the dynamic nature of the Company's laboratory services. Engagement
for subsequent projects is highly dependent upon the customer's satisfaction
with the services previously provided, and upon factors beyond the Company's
control, such as the timing of product development and commercialization
programs of the Company's customers. The Company is unable to predict for more
than a few months in advance the volume and dollar amount of future projects in
any given period. The combined impact of commencement and termination of
research contracts from several large customers and unpredictable fluctuations
in revenue for laboratory services can result in very large fluctuations in
financial performance from quarter to quarter. In the near-term, the Company
expects that it may derive a larger portion of its revenues from laboratory
services. Thus, the company may experience a pronounced shift from contract
research to laboratory services, which may result in a less predictable revenue
stream.
Expenses
Cost of services consists primarily of labor and laboratory supplies.
Cost of services increased by $77,723, or 43.7%, from $177,999 in the 1997
quarter to $255,722 in the first quarter in 1998. The cost of services as a
percentage of revenue was 29.5% and 51.2% in the first quarters of 1997 and
1998, respectively. Labor costs increased by $33,475 or 38.4% from $87,298 in
the 1997 quarter to $120,773 in the 1998 quarter. The costs for direct materials
increased by $40,913 or 49.6% from $82,439 in the 1997 quarter to $123,352 in
the 1998 quarter. Costs for reagents increased by $24,353, or 71.7%, from
$33,963 in the 1997 quarter to $58,316 in the 1998 quarter.
<PAGE>
Operating costs include general and administrative, selling, and
marketing expenses. In the 1998 quarter, two new departments were established,
Marketing and Sales. Costs incurred in these departments consist primarily of
compensation and related costs for administrative and sales personnel, marketing
and sales, depreciation and amortization, professional fees, trade show costs,
advertising costs (including design, printing and distribution of a new Company
brochure), and contracting of a marketing and media relations firm. Prior to the
1998 quarter, the Company had no formal marketing or sales initiatives. The
Company has hired a full-time account executive for the eastern region, and has
retained the services of a search firm to identify a sales representative for
the west coast.
Total selling, marketing, and general and administrative expenses
increased by $436,970, or 436.6%, from $100,094 in the 1997 quarter to $537,064
in the 1998 quarter. As a percentage of revenue, these costs were 16.6% and
107.6%, respectively, for the 1997 quarter and the 1998 quarter.
Marketing costs increased by $59,374, or 512.6%, from $11,583 in the
1997 quarter to $70,957 in the 1998 quarter. Allocation of salaries and fringe
benefits, expenditures for the new brochure, additional advertising in various
magazines, contracting of a marketing firm, and trade show costs contributed to
these increased costs.
Compensation and benefit expenses of General and Administrative costs
increased by $182,113, or 711.3%, from $25,601 in the 1997 quarter to $207,714
in the 1998 quarter. The increase in costs primarily reflects full-time
employment of the Company's four founders, and salary and benefit costs for
various other support personnel. Costs for facilities increased by $43,218, or
1032.2%, from $4,187 in the 1997 quarter to $47,405 in the 1998 quarter. Since
the 1997 quarter, the Company has leased additional laboratory space for its
operations. Professional fees increased by $42,456, or 955.8%, from $4,267 in
the 1997 quarter to $46,723 in the 1998 quarter. This increase was primarily due
to legal and accounting costs associated with the year-end audit of the Company
as a C Corporation, general legal support, and corporate liability insurance
costs. Depreciation increased by $43,852, or 174.3% from $25,155 in the 1997
quarter to $69,007 in the 1998 quarter. Increased depreciation costs are
attributable to the purchase of additional laboratory equipment in the latter
part of 1997.
Total expenditures for both grant-related research and development
activities and for in-house Company research and development activities
increased by $33,976, or 49.2%, from $69,016 in the 1997 quarter to $102,992 in
the 1998 quarter. However, expenditures to perform grant-related research and
development activities actually decreased by $24,283, or 47.%, from $51,717 in
the 1997 quarter to $27,434 in the 1998 quarter. Expenditures were made on
in-house Company research and development projects which are aimed at
establishing fundamental technologies, such as methods for genetic testing for
agricultural and human applications, genome sequence analysis, molecular
modeling, large scale peptide synthesis, and novel methods for preparing
peptide-enzyme conjugates.
<PAGE>
Expenditures were also made by the Company to supplement grant-related
research activities. These expenditures increased by $58,259, or 336.8%, from
$17,298 in the 1997 quarter to $75,557 in the 1998 quarter. Total research and
development costs as a percentage of revenue were 11.4% in the 1997 quarter and
20.6% in the 1998 quarter. It is expected that once the new technology programs
are fully established, research and development costs will remain constant at
about 15% of revenue.
Other Income and Expenses
Interest income to the Company in the 1998 quarter was $82,639, there
was essentially no interest income to the Company in the 1997 quarter. Interest
income is derived from investing the unused portion of the funds realized by the
Company from its Private Placement (June, 1997) and Initial Public Offering
(October, 1997).
Interest cost incurred by the Company in the 1998 quarter included (1)
interest paid to financial institutions on loans made to the Company; (2)
interest paid to the Trustee for Industrial Revenue Bonds (IRBs) issued in
March, 1998, for construction of the Company's new facility; and (3)
amortization of bond costs incurred as a consequence of the completion of the
Company's IRB Placement.
Interest expense incurred on the Company's IRBs was $10,559 in the 1998
quarter. Interest paid to financial institutions on loans made to the Company
increased by $ 2,105, or 40.%, from $5,264 in the 1997 quarter to $7,369 in the
1998 quarter. The total outstanding principal amount of these loans as of March
31, 1998, is $299,680.
Liquidity and Capital Resources
Commonwealth Biotechnologies, Inc.'s financial condition remains strong
as reflected in the balance sheet as of March 31, 1998. Working capital as of
March 31, 1998 was approximately $5,139,860 as compared to $343,395 in the 1997
quarter.
Cash flow used by operations in the 1998 quarter was $228,662 as
compared to $37,936 in the 1997 quarter. The Company's cash flow used by
operations is a direct result of operating expenses exceeding revenues.
Management anticipated this decrease in cash.
Capital realized from the Company's private placement and IPO were also
used in the 1998 quarter for the purchase of fixed assets. This amount totaling
$317,150. Investment capital was also used in the 1998 quarter for bond issuance
costs, associated with issuance of IRBs (as described below) in the amount of
$153,186.
<PAGE>
On March 15, 1998, the Company completed the sale of Industrial
Development Revenue Bonds ("IRBs") in the aggregate amount of $4,000,000. The
Virginia Small Business Financing Authority issued these bonds. The IRBs were
issued pursuant to an Indenture of Trust dated March 15, 1998, between the
Virginia Small Business Financing Authority and Crestar Bank, a Virginia banking
association, the named Trustee.
The IRBs were issued and sold to facilitate construction of the
Company's new 30,000 square foot facility in Gateway Centre in Chesterfield
County, Virginia. Construction of this facility is anticipated to be completed
in late December. All of the Company's operations will be consolidated into this
facility.
Year 2000 Project
The year 2000 presents problems for businesses that are dependent on
computer hardware and software to perform date dependent calculations and logic
comparisons. A great deal of software and microchip technology was developed
utilizing two digit years rather than four digit years. Technology utilizing two
digit years will most likely not be able to distinguish the year 2000 from 1900,
and therefore may shut down or perform miscalculation and comparisons as much as
100 years off.
Management is fully aware this presents a potential business
disruption, and has begun a program of due diligence in addressing the impact of
the Year 2000 on the Company and its operations. Once identified, areas of
exposure will be prioritized as to severity and time to cure, with a plan
developed to make the Company Year 2000 compliant. Management anticipates the
Company will be year 2000 compliant.
Forward Looking Statements
Management has included herein certain forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. When used,
statements which are not historical in nature, including the words "anticipate",
"estimate", "should", "expect", "believe", "intend", and similar expressions are
intended to identify forward-looking statements. Such statements are, by their
nature, subject to certain risks and uncertainties. Among the factors that could
cause the actual results to differ materially from those projected are the
following: business conditions and the general economy; the federal, state, and
local regulatory environment; availability of tax exempt bond financing with
favorable terms and conditions; lack of demand for the Company's services; the
ability of the Company's customers to perform services similar to those offered
by the Company "in-house"; and potential cost containment by the Company's
customers resulting in fewer research and development projects. Other risks,
uncertainties, and factors that could cause actual results to differ materially
from those projected are detailed from time to time in reports filed by the
Company with the securities and exchange commission, including Forms 8-K, 10QSB,
and 10KSB.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not currently involved in any legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
On October 28, 1997, the Company completed its initial public offering
of Common Stock (the "Initial Public Offering"). The net proceeds to the Company
from the Initial Public Offering were $5,402,800. Through May 15, 1998, the
Company spent approximately $522,000 of the Initial Public Offering proceeds as
follows: $227,000 for the development of the Company's new laboratory facility,
$212,000 for capital expenditures, $71,000 for marketing expenses. The remaining
amount is invested in an interest-bearing account at a commercial bank.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
<S> <C>
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Form of Common Stock Certificate (1)
4.2 Form of Underwriter's Warrant, as amended (1)
4.3 Form of Management Warrant, as amended (1)
4.4 Indenture of Trust by and between the Virginia Small Business Financing
Authority and Crestar Bank relating to the issuance of industrial revenue
bonds for the benefit of the Company (2)
10.1 Placement Agreement by and between the Company and Anderson & Strudwick,
Incorporated (1)
10.2 Warrant Agreement between the Company and Anderson & Strudwick, Incorporated
(1)
10.3 Warrant Agreement between the Company and Richard J. Freer, as amended (1)
10.4 Warrant Agreement between the Company and Thomas R. Reynolds, as amended (1)
10.5 Warrant Agreement between the Company and Gregory A. Buck, as amended (1)
10.6 Warrant Agreement between the Company and Robert B. Harris, as amended (1)
10.7 Employment Agreement for Richard J. Freer (1)
10.8 Employment Agreement for Thomas R. Reynolds (1)
10.9 Employment Agreement for Gregory A. Buck (1)
10.10 Employment Agreement for Robert B. Harris (1)
10.11 Executive Severance Agreement for Richard J. Freer (1)
10.12 Executive Severance Agreement for Thomas R. Reynolds (1)
10.13 Executive Severance Agreement for Gregory A Buck (1)
10.14 Executive Severance Agreement for Robert B. Harris (1)
10.15 1997 Stock Incentive Plan, as amended (1)
10.16 Form of Incentive Stock Option Agreement (1)
10.17 Loan Agreement by and between the Virginia Small Business Financing
Authority and the Company (2)
27.1 Financial Data Schedule (3)
</TABLE>
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2, Registration No. 333-31731, as amended.
(2) Incorporated by reference to the Company's Current Report on Form 8-K,
dated April 6, 1998, File No. 001-13467.
(3) Filed herewith.
<PAGE>
(b) Reports on Form 8-K.
The Company filed the following Current Reports on Form 8-K during the
fiscal quarter ended March 31, 1998:
(i) Form 8-K, dated March 2, 1998, and Form 8-K/A, dated
March 12, 1998, relating to the termination of the
Company's certified public accountants; and
(ii) Form 8-K, dated February 13, 1998, relating to the
issuance of a press release announcing the Company's
earnings for the fiscal year ended December 31, 1997.
<PAGE>
SIGNATURES
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.
COMMONWEALTH BIOTECHNOLOGIES, INC.
By: /s/ Robert B. Harris
-----------------------------
Robert B. Harris
President
May 15, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,559,767
<SECURITIES> 0
<RECEIVABLES> 149,432
<ALLOWANCES> 0
<INVENTORY> 21,799
<CURRENT-ASSETS> 5,739,919
<PP&E> 2,420,309
<DEPRECIATION> 356,745
<TOTAL-ASSETS> 11,575,212
<CURRENT-LIABILITIES> 600,059
<BONDS> 4,000,000
0
0
<COMMON> 760
<OTHER-SE> 6,974,393
<TOTAL-LIABILITY-AND-EQUITY> 11,575,212
<SALES> 499,237
<TOTAL-REVENUES> 499,237
<CGS> 0
<TOTAL-COSTS> 895,778
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,301
<INCOME-PRETAX> (332,203)
<INCOME-TAX> 0
<INCOME-CONTINUING> (332,203)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (332,203)
<EPS-PRIMARY> (0.205)
<EPS-DILUTED> (0.205)
</TABLE>
