QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS
SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
Commission File Number: 001-14005
FRISBY TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 62-1411534
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
77 East Main Street
Suite 2000
Bay Shore, New York 11706
(Address of Principal Executive Offices and Zip Code)
(516) 969-8570
(Registrant's telephone number, including area code)
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 ________
Number of shares outstanding of the issuer's Common Stock, par value $.001
per share, as of April 30, 1999: 5,708,113 shares.
<PAGE>
FRISBY TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Balance Sheets - March 31, 1999 (unaudited) and
December 31, 1998 3
Statements of Operations - Three Month Period Ended March 31,
1999 (unaudited) and March 31, 1998
(unaudited) 4
Statement of Stockholders' Equity - Three Month Period
Ended March 31, 1999 (unaudited) 5
Statements of Cash Flows - Three Month Period Ended March 31,
1999 (unaudited) and March 31, 1998 (unaudited) 6
Notes to Financial Statements - March 31, 1999 (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II Other Information 12
Signatures 14
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Frisby Technologies, Inc.
Balance Sheets
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,308,617 $ 6,516,138
Marketable securities 1,548,359 1,555,683
Accounts receivable - billed 982,755 1,045,975
Accounts receivable - unbilled 89,535 58,159
Inventory 661,295 671,569
Prepaid and other current assets 369,535 595,998
--------------------- -------------------
Total current assets 7,960,096 10,443,522
Property and equipment, net 505,299 277,494
Intangible assets, less accumulated amortization 2,037,403 2,000,700
Other assets 291,994 391,516
--------------------- -------------------
Total assets $ 10,794,792 $ 13,113,232
===================== ===================
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 648,685 $ 868,649
Accrued expenses and other current liabilities 141,774 385,533
Payable to Triangle Research and Development Corporation - 400,000
License fees payable 146,076 189,726
Deferred license revenues 68,751 85,000
--------------------- -------------------
Total current liabilities 1,005,286 1,928,908
Accrued license agreement costs 120,250 120,250
Deferred license revenues 66,250 46,250
Other liability 1,300,000 1,300,000
--------------------- -------------------
Total liabilities 2,491,786 3,395,408
Commitments
Stockholders' equity:
Preferred Stock, 1,000,000 shares authorized; 587,500 shares issued and
outstanding: 2,479,000 2,479,000
Common Stock, $.001 par value; 10,000,000 shares authorized;
5,120,613 shares issued and outstanding 5,121 5,121
Additional paid-in capital 12,199,828 12,199,828
Accumulated other comprehensive income 13,675 21,000
Accumulated deficit (6,394,618) (4,987,125)
--------------------- -------------------
Total stockholders' equity 8,303,006 9,717,824
--------------------- -------------------
Total liabilities and stockholders' equity $ 10,794,792 $ 13,113,232
===================== ===================
</TABLE>
See accompanying notes.
<PAGE>
Frisby Technologies, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three month period ended
March 31,
-----------------------------------------------
1999 1998
------------------- --------------------
<S> <C> <C>
Revenues:
Product sales $ 830,420 $ 271,375
Research and development projects 101,375 49,271
Licenses and royalties 95,031 26,618
------------------- --------------------
Total revenues 1,026,826 347,264
------------------- --------------------
Cost of sales:
Product sales 657,200 221,813
Research and development projects 81,935 34,776
Licenses and royalties 106,457 1,765
------------------- --------------------
Total cost of sales 845,592 258,354
------------------- --------------------
Gross profit 181,234 88,910
Selling and marketing expense 748,000 220,148
General and administrative expense 915,956 400,993
------------------- --------------------
Loss from operations (1,482,722) (532,231)
Interest income 75,229 2,884
------------------- --------------------
Loss before income taxes (1,407,493) (529,347)
Income tax provision - -
Net loss $ (1,407,493) $ (529,347)
=================== ====================
Net loss per common share - basic and diluted $ (.27) $ (.16)
=================== ====================
</TABLE>
See accompanying notes.
<PAGE>
Frisby Technologies, Inc.
Statement of Stockholder's Equity (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Accumu-
lated
Other
Additional Compre- Accumu-
Preferred Stock Common Stock Paid-In hensive lated
Shares Amount Shares Amount Capital Income Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1998 587,500 $2,479,000 5,120,613 $5,121 $12,199,828 $21,000 $(4,987,125) $9,717,824
Net Loss --- --- --- --- --- --- (1,407,493) (1,407,493)
Unrealized gains
on marketable
securities --- --- --- --- --- ( 7,325) --- ( 7,325)
----------
Comprehensive
(loss) --- --- --- --- --- --- --- (1,414,818)
Balance at -------- ---------- --------- ------ ----------- ------- ----------- ----------
March 31, 1999 587,500 $2,479,000 5,120,613 $5,121 $12,199,828 $13,675 $(6,394,618) $8,303,006
======== ========== ========= ====== =========== ======= =========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Frisby Technologies, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three month period ended
March 31,
-------------------------------------------
<S> <C> <C>
1999 1998
---- ----
Operating activities
Net loss $ (1,407,493) $ (529,347)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 37,471 3,345
Non cash consulting expense 70,000 --
Amortization of intangibles 51,300 --
Changes in assets and liabilities, prior to effect of acquisition:
Accounts receivable 37,448 (14,541)
Inventory 38,797 (42,502)
Other current assets 156,463 (18,074)
Other non-current assets 99,522 --
Accrued license agreement costs -- --
Accounts payable (238,243) (143,952)
Accrued expenses and other current liabilities (243,759) 58,634
Licenses fees payable (43,650) (100,961)
Other liabilities 3,751 (12,500)
------------------- -------------------
Net cash used in operating activities (1,438,393) (799,898)
------------------- -------------------
Investing activities
Purchases of property and equipment (265,276) --
Purchase of intangible assets (400,000) --
Purchase of business, net of cash acquired (103,852) --
------------------- -------------------
Net cash used in investing activities (769,128) --
------------------- -------------------
Financing activities
Net proceeds from private placement -- 2,479,000
Payment of transaction costs -- (227,264)
------------------- -------------------
Net cash provided by financing activities -- 2,251,736
------------------- -------------------
Net (decrease) increase in cash and cash equivalents (2,207,521) 1,451,838
Cash and cash equivalents - beginning of period 6,516,138 375,222
------------------- -------------------
Cash and cash equivalents -end of period $ 4,308,617 $ 1,827,060
=================== ===================
</TABLE>
See accompanying notes
<PAGE>
Frisby Technologies, Inc.
Notes to Financial Statements
March 31, 1999 (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
conformity with generally accepted accounting principles and reflect all
adjustments consisting of normal recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the results for the periods
shown. The results of operations for such periods are not necessarily indicative
of the results expected for the full fiscal year or for any future period. 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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.
The accompanying financial statements should be read in conjunction with
the audited financial statements of Frisby Technologies, Inc. (the "Company")
for the year ended December 31, 1998 and the notes thereto contained in the
Company's Annual Report on Form 10-KSB, filed with the Securities and Exchange
Commission on March 31, 1999, as amended.
2. Summary of Significant Accounting Policies
Net Loss Per Share
Net loss per share for the three-month periods ended March 31, 1999 and
1998 are based on the weighted average number of common shares outstanding
during the period in accordance with the Statement of Financial Accounting
Standard ("SFAS") No. 128 "Earnings Per Share."
Shares used in the computation of net loss per share for the three month
periods ended March 31, 1999 and 1998 were 5,120,613 and 3,280,613,
respectively, representing the weighted-average common shares outstanding for
the period. The number of shares used in the calculation of net loss per share
on a basic and diluted basis is the same.
3. Shareholders' Equity
On April 6, 1999, the Company received notice from the shareholder of the
Convertible Preferred Stock of its decision to convert the 587,500 shares of
Convertible Preferred Stock shares into Common Stock. This transaction increases
the number of outstanding common stock to 5,708,113.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations for the three month period ended March 31, 1999
compared with the three month period ended March 31, 1998
Revenues. The Company generates revenue from three primary sources: (i)
sales of its Thermasorb(R) additives and ComforTemp(R) foam products for use in
its strategic partners' products; (ii) revenue from research and development
contracts related to the United States government and private companies; and
(iii) license fees and royalties from the use of the Thermasorb(R) and
ComforTemp(R) trademarks by strategic partners in end-use products, as well as
other fees earned in connection with its agreements with strategic partners.
Total revenues for the three month period ended March 31, 1999 increased by
$680,000 to $1,027,000 from $347,000 for the three month period ended March 31,
1998.
Product sales. Product sales for the three month period ended March 31,
1999 increased by $559,000 to $830,000 from $271,000 for the three month period
ended March 31, 1998. The increase was primarily the result of product shipments
to additional licensees since the first quarter of 1998. The Company had
twenty-two licensees at March 31, 1999 as compared to the eight licensees at
March 31, 1998.
Research and development projects. Revenues from research and development
projects for the three month period ended March 31, 1999 increased by $52,000 to
$101,000 from $49,000 for the three month period ended March 31, 1998. This
increase reflects the completion of a funded United States government research
and development contract that began in the second half of 1998 and the
completion of funded contracts with undisclosed private companies for potential
applications incorporating the Company's thermal management products.
Licenses and royalties. Revenues from license fees and royalties for the
three month period ended March 31, 1999 increased by $68,000 to $95,000 from
$27,000 for the three month period ended March 31, 1998. This increase reflects
the recognition of fees received from strategic partners for license agreements
entered into after the first quarter 1998. License fees are recognized as
revenue ratably over the life of the license agreement. Additionally, the
increase is due to royalty income received from a third party as a result of the
assignment of a license agreement from Triangle Research Development Corporation
("TRDC") to the Company in September 1998.
Cost of Sales. The Company's cost of sales consists of: (i) direct and
indirect costs incurred in connection with product sales; (ii) direct and
indirect costs incurred in connection with revenue from research and development
contracts relating to the United States government and private sector programs;
(iii) royalty payments required to be made to the inventor of the thermal
management technology or another party licensed by the inventor; and (iv) the
amortization expense associated with the September 1998 transaction with the
inventor to lower the royalty rates. Costs of sales for the three month period
ended March 31, 1999 increased by $588,000 to $846,000 compared to $258,000 for
the three month period ended March 31, 1998.
<PAGE>
Cost of sales -- Products. The cost of sales related to products for the
three month period ended March 31, 1999 increased by $435,000 to $657,000 from
$222,000 for the three month period ended March 31, 1998. This increase reflects
the higher volume of product sales and the corresponding costs related to such
product sales in the three month period ended March 31, 1999 as compared to the
corresponding period in the prior year.
Cost of sales -- Research and development projects. The cost of sales
related to research and development projects for the three month period ended
March 31, 1999 increased by $47,000 to $82,000 from $35,000 for the three month
period ended March 31, 1998. This increase reflects the higher research and
development revenues in the three month period ended March 31, 1999 as compared
to the corresponding period in the prior year.
Cost of Sales -- Licenses and royalties. The cost of sales related to
licenses and royalties for the three month period ended March 31, 1999 increased
by $104,000 to $106,000 from $2,000 for the three month period ended March 31,
1998 primarily due to amortization of intangible and royalties expense related
to the September 1998 transaction with TRDC.
Selling and marketing expense. Selling and marketing expense for the three
month period ended March 31, 1999 increased by $528,000 to $748,000 from
$220,000 for the three month period ended March 31, 1998. This increase was
primarily the result of the Company increasing its marketing and advertising
activity in order to build brand name recognition of its Thermasorb(R) and
ComforTemp(R) products and trademarks. These activities included the hiring of
additional sales personnel, advertising placements in many national trade and
consumer publications and tradeshow participation. Additionally, consulting
expense of $70,000 was recorded relating to warrants and options granted to
consultants in 1998.
General and administrative expense. General and administrative expense for
the three month period ended March 31, 1999 increased by $515,000 to $916,000
from $401,000 for the three month period ended March 31, 1998. The increase
reflects the increase in personnel and personnel-related expenses, including
travel, and recruiting costs of new employees. Additionally, fees and expenses
paid to consultants have also increased over the comparable period for the prior
year. These increases are in connection with the expansion of the Company's
operations and commercialization of its thermal management products.
<PAGE>
Net interest income/expense. Net interest income for the three month period
ended March 31, 1999 increased by $72,000 to $75,000 from $3,000 for the three
month period ended March 31, 1998.
Net loss. As a result of the foregoing, the net loss for the three month
period ended March 31, 1999 increased to $1,407,000 from $530,000 for the three
month period ended March 31, 1998.
Liquidity and capital resources. From its inception through March 31, 1999,
the Company has incurred cumulative losses of approximately $6,395,000. The
Company has financed its operations to date through research and development
contracts relating to United States government programs, bank borrowings and
issuance of common stock and convertible preferred stock.
At March 31, 1999, the Company had working capital of $6,955,000, including
cash and marketable securities of $5,057,000 accounts receivable billed of
$983,000 and inventory of $661,000, offset by accounts payable of $649,000 and
license fees payable of $146,000.
Cash used by operating activities was $1,438,000 and $800,000 respectively,
for the three month period ended March 31, 1999 and 1998. The principal factor
contributing to the cash used in operating activities for the three month period
ended March 31, 1999 and 1998 was the net loss for each of the respective
periods. Cash used in investing activities was $769,000 for the three month
period ended March 31, 1999. The principal investing activity for this period
was an installment payment to TRDC for the agreement signed in September 1998,
the purchase of the assets of Steele Incorporated, and the purchase of equipment
for the development facility in North Carolina. Cash provided by financing
activities was $2,252,000 for the three month period ended March 31, 1998. The
principal financing activity for the three month period ended March 31, 1998 was
the receipt of the net proceeds of $2,479,000 from the exercise of the
Convertible Preferred Stock Option by one holder of record.
The Company is relocating its North Carolina operations to a newly
constructed facility located in Winston Salem, North Carolina during the second
half of fiscal 1999. The cash requirement with respect to that relocation will
be expended in the third and forth quarters of 1999 and total 1999 capital
expenditures are not expected to exceed $1,000,000.
The Company has a $1,000,000 line of credit with a bank. The line of credit
bears interest at the lower of the bank's prime rate or a two point spread
versus the London Interbank Overnight Rate ("LIBOR") and will expire on June 30,
1999. The full amount of the line is currently available. It is the Company's
intent to renew or replace the line of credit in order to accommodate possible
future funding requirements.
<PAGE>
The Company has incurred cumulative losses since its inception and,
therefore, has not been subject to significant federal income taxes. Through
March 31, 1999, the Company has generated net operating loss carryforwards of
approximately $6,000,000, which may be available to reduce future available
taxable income and future tax liabilities. These carryforwards expire in year
2018. The Tax Reform Act of 1986 provides for an annual limitation on the use of
net operating loss carryforwards (following certain ownership changes) that
could significantly limit the Company's ability to utilize these carryforwards.
Upon the completion of the Company's initial public offering ("IPO"), or the
subsequent exercise of options or warrants in connection with other future sales
of equity, the Company's ability to utilize the aforementioned carryforwards may
be limited. Additionally, because the United States tax laws limit the time
during which these carryforwards may be applied against future taxes, the
Company may not be able to take full advantage of these attributes for federal
tax purposes.
Based on the Company's current operating plan, the Company believes that
its available cash, cash flow from operations and available line of credit, will
be sufficient to satisfy its operational and capital requirements through
December 1999. Such belief is based upon certain assumptions, and there can be
no assurance that such assumptions are correct. In the event that the Company's
plans change, or its available cash, cash flow from operations and available
line of credit are insufficient to fund operations due to unanticipated delays,
problems, expenses or otherwise, the Company would be required to seek
additional financing sooner than anticipated. Further, depending on the
Company's progress in marketing its product line, gaining acceptance of its
thermal management technology and its other products and services among the
business community or the identification of strategic acquisition or licensing
opportunities, the Company may determine that it is advisable to raise
additional capital sooner than was anticipated.
Inflation
The impact of general inflation on the Company's business has been
insignificant to date and the Company believes that it will continue to be
insignificant for the foreseeable future.
Year 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
<PAGE>
Based on recent assessments, the Company determined that it will not
require significant modifications of its hardware or software so that those
systems will properly utilize dates beyond December 31, 1999. The Company
presently believes that with modifications of its existing software, the Year
2000 Issue can be mitigated.
The Company's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing, and implementation. As of April
30, 1999, the Company has fully completed its assessment of all internal systems
that could be significantly affected by the Year 2000. The completed assessment
indicated that most of the Company's significant information technology systems
will not be significantly affected, particularly the general ledger, billing,
and inventory systems. The Company does not believe that the Year 2000 presents
a material exposure as it relates to the Company's products. In addition, the
Company has begun to gather information about the Year 2000 compliance status of
its external agents and continues to monitor their compliance. To date, the
Company is not aware of any external agent with a Year 2000 issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. The Company has requested from its bank an assessment of the extent
of the bank's Year 2000 compliance. In the event the bank is not Year 2000
compliant in a timely manner, the Company is prepared to change banks. However,
the Company has no means of ensuring that external agents will be Year 2000
ready. The inability of external agents to complete their Year 2000 resolution
process in a timely fashion could materially and adversely impact the Company.
The effect of non-compliance by external agents is not determinable.
The Company will utilize its external software and service provider to
reprogram, test and implement the software for the Year 2000 modification as
needed, the cost of which is not expected to be significant. The Company will
evaluate the status of completion of Year 2000 modifications in June 1999 and
will undertake all remaining necessary steps to seek to ensure its systems are
Year 2000 compliant. In the event the Company is unable to resolve its Year 2000
modifications in a timely fashion, the business of the Company may be materially
and adversely impacted.
In the event the Company's computer systems are materially adversely
affected by the Year 2000 issue, the Company's business and operations could be
materially adversely affected by disruptions in the operations of other entities
with which the Company interacts. However, the Company believes that the most
likely worst case scenario is that there will be some localized disruptions of
systems that will affect individual processes, facilities or service technology
providers for a short time rather than systematic or long-term problems
affecting its business operations as a whole. In such event the Company has
contingency plans for certain critical applications and is working on plans for
others. These contingency plans involve, among other actions, manual
workarounds, increasing inventories, and adjusting staffing strategies.
Forward-Looking Statements
Certain information contained in this Quarterly Report on Form 10-QSB,
including, without limitation, information appearing under Part I, Item 2,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934). Factors set forth in the Company's Prospectus filed April 1, 1998, or in
the Company's other Securities and Exchange Commission filings, could affect the
Company's actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Quarterly Report on Form 10-QSB.
Those statements are subject to numerous risks and uncertainties that could
cause actual results, performance and achievements to differ materially from
those described or implied in the forward-looking statements, and reported
results should not be considered an indication of future performance. Those
potential risks and uncertainties include without limitation the uncertainty of
the economic environment for the remainder of this year, the need for further
development of certain Frisby Technologies' products and markets, the
development of alternative technologies by third parties, Year 2000 issues
affecting the Company and its customers and suppliers, and the uncertainty of
market acceptance and demand for the Company's products in the future.
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
On April 6, 1999, the Company received notice from the shareholder of the
Convertible Preferred Stock of its decision to convert the 587,500 shares of
Convertible Preferred Stock shares into Common Stock. This transaction increases
the number of outstanding common stock to 5,708,113.
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.
<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.
Dated: May 17, 1999
FRISBY TECHNOLOGIES, INC.
By: /s/Gregory S. Frisby
-------------------------------
Gregory S. Frisby
President and Chief Executive Officer
By: /s/Stephen P. Villa
-------------------------------
Stephen P. Villa
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001051904
<NAME> Frisby Technologies, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,305,617
<SECURITIES> 1,548,359
<RECEIVABLES> 1,102,290
<ALLOWANCES> (80,000)
<INVENTORY> 661,295
<CURRENT-ASSETS> 7,960,096
<PP&E> 625,373
<DEPRECIATION> (120,074)
<TOTAL-ASSETS> 10,794,792
<CURRENT-LIABILITIES> 1,005,285
<BONDS> 0
0
2,479,000
<COMMON> 5,121
<OTHER-SE> 5,818,885
<TOTAL-LIABILITY-AND-EQUITY> 10,794,792
<SALES> 830,420
<TOTAL-REVENUES> 1,026,826
<CGS> 657,200
<TOTAL-COSTS> 845,592
<OTHER-EXPENSES> 1,663,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (75,222)
<INCOME-PRETAX> (1,407,493)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,407,493)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (0.27)
<EPS-DILUTED> (0.27)
</TABLE>
