<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to _________.
Commission file number: 333-79969
DURASWITCH INDUSTRIES, INC.
(Exact name of Small Business Issuer as Specified in Its Charter)
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NEVADA 88-0308867
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
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234 S. EXTENSION ROAD,
MESA, ARIZONA 85210
(Address of Principal Executive Office)
(480) 586-3300
(Issuer's Telephone Number, Including Area Code)
(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 past 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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 7,519,655 shares of common
stock outstanding as of March 31, 2000.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DURASWITCH INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
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<CAPTION>
ASSETS DECEMBER 31, 1999 MARCH 31, 2000
<S> <C> <C>
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 5,884,827 $ 4,306,378
Accounts receivable (net of allowance for doubtful accounts
of $40,000 in 1999 and 2000) 238,393 578,038
Inventory (Note 2) 536,494 427,072
Prepaid expenses and other current assets 235,252 245,621
------------ ------------
Total current assets 6,894,966 5,557,109
------------ ------------
PROPERTY AND EQUIPMENT - Net (Note 3) 592,411 629,405
GOODWILL - Net 589,805 571,563
PATENTS AND OTHER ASSETS 160,878 167,263
------------ ------------
TOTAL $ 8,238,060 $ 6,925,340
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 242,551 $ 157,533
Accrued salaries and benefits 462,014 327,256
Accrued expenses and other current liabilities 228,176 159,101
Line of credit 75,000 50,000
Current portion of notes and capital leases payable 234,893 87,166
------------ ------------
Total current liabilities 1,242,634 781,056
------------ ------------
LONG-TERM LIABILITIES:
Notes payable 63,985 48,749
Capital leases payable 60,713 79,885
------------ ------------
Total long-term liabilities 124,698 128,634
------------ ------------
Total liabilities 1,367,332 909,690
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 40,000,000 shares authorized in
1999 and 2000, 7,495,594 and 7,519,655 shares issued and
outstanding in 1999 and 2000, respectively 7,496 7,520
Preferred stock, $.001 par value, 10,000,000 shares authorized,
no shares issued and outstanding
Additional paid-in capital 13,273,927 13,306,254
Accumulated deficit (6,263,432) (7,298,124)
Note receivable (147,263)
------------ ------------
Total stockholders' equity 6,870,728 6,015,650
------------ ------------
TOTAL $ 8,238,060 $ 6,925,340
============ ============
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See notes to consolidated financial statements.
<PAGE> 3
DURASWITCH INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 2000
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Net sales $ 467,614 $ 724,851
Cost of goods sold 463,716 789,374
--------- ---------
Gross (loss) profit 3,898 (64,523)
--------- ---------
Operating expenses:
Selling, General and Administrative 366,938 655,795
Research and Development 104,634 366,730
--------- ---------
Total Operating expenses 471,572 1,022,525
--------- ---------
Loss from operations (467,674) (1,087,048)
Other income (expense) - net 17,558 52,356
--------- ---------
Net loss $ (450,116) $(1,034,692)
--------- ---------
Net loss per common share, basic and diluted $ (0.09) $ (0.14)
--------- ---------
Weighted average shares outstanding, basic and
diluted 5,072,655 7,502,988
--------- ---------
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<PAGE> 4
DURASWITCH INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (450,116) $(1,034,692)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 42,183 78,180
Gain on sale of equipment (12,500) 910
Stock option compensation expense 2,777 --
Issuance of stock for services 8,500 --
Changes in operating assets and liabilities:
Accounts receivable (180,146) (339,645)
Inventory (129,708) 109,422
Prepaid expenses and other current assets 19,028 (10,369)
Accounts payable 232,748 (85,018)
Accrued salaries and benefits 20,065 (134,758)
Accrued expenses and other current liabilities 66,611 (69,075)
----------- -----------
Net cash used in operating activities (380,558) (1,485,045)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in patents and other assets (5,786) (15,925)
Loan to Camplex/Concept W Corporation (150,000) --
Proceeds from sale of equipment 12,500 --
Purchases of property and equipment (132,517) (53,502)
----------- -----------
Net cash used in investing activities (275,803) (69,427)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of stock 805,586 32,351
Proceeds from note receivable for common stock -- 147,263
Principal payments on notes payable and capital leases (36,014) (178,591)
Proceeds from notes payable to shareholders 100,000 --
Net (decrease) increase in line of credit 95,000 (25,000)
Net change in loans from officers (40,281) --
----------- -----------
Net cash provided by (used in) financing activities 924,291 (23,977)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 267,930 (1,578,449)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 143,860 5,884,827
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 411,790 $ 4,306,378
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 10,531 $ 14,116
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Acquisition of equipment through capital lease 57,873 34,800
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<PAGE> 5
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOTE 1:
BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared by the Company
in accordance with the rules and regulations of the Securities and Exchange
Commission for interim reporting. Accounting policies utilized in the
preparation of financial information herein presented are the same as set forth
in the Company's annual financial statements. Certain disclosures and
information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the interim financial
statements. Interim results of operations are not necessarily indicative of the
results of operations for the full year.
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NOTE 2: INVENTORIES DECEMBER 31, 1999 MARCH 31, 2000
Inventories consist of the following:
<S> <C> <C>
Raw materials $ 252,121 $ 84,073
Work in process 204,729 209,786
Finished goods 99,644 153,213
--------- ---------
Subtotal 556,494 447,072
--------- ---------
Less reserve for obsolete inventory (20,000) (20,000)
--------- ---------
Total $ 536,494 $ 427,072
========= =========
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NOTE 3: PROPERTY AND EQUIPMENT DECEMBER 31, 1999 MARCH 31, 2000
Property and Equipment consist of the following:
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Computer equipment $ 207,110 $ 287,575
Other machinery and equipment 335,835 355,656
Leasehold Improvements 150,335 153,099
Office furniture and fixtures 75,663 75,663
--------- ---------
Subtotal 768,943 871,993
Less accumulated depreciation and amortization (176,532) (242,588)
--------- ---------
Total $ 592,411 $ 629,405
========= =========
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<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 VS. THREE MONTHS ENDED MARCH 31, 1999
Net Sales:
We recorded net sales of $724,851 for the three months ended March 31,
2000, the "2000 Period", compared to $467,614 for the three months ended March
31, 1999, the "1999 Period". Sales during the 2000 Period consisted primarily of
switches and Integrated Control Panels produced with DuraSwitch technology. We
also completed the Ericsson purchase order cancellation negotiation (see Item 5
Other Information of this report for additional details), which generated
$340,000 of revenue recognition for the 2000 Period with appropriate inventory
and prepaid costs expensed to cost of goods sold.
Cost of Goods Sold:
Cost of goods sold was $789,374 for the 2000 Period, compared to
$463,716 for the 1999 Period. The increase in cost of goods sold was primarily
due to increased sales, increased manufacturing overhead and application
engineering costs related to developing an infrastructure to accommodate high
quality, custom, low volume prototype work of new applications using our
patented technology. The setup costs and low volume purchasing for prototype
quantities were also factors of increased cost of goods sold. We have also
continued to incur significant costs during the 2000 Period to maintain high
quality control standards.
Selling, General and Administrative expenses:
Selling, general and administrative expenses were $655,795 for the 2000
Period, compared to $366,938 for the 1999 Period. The increase in selling,
general and administrative expenses was primarily due to preparing and proving
our manufacturing processes, setting quality assurance programs, training sales
representatives, refining our technology and structuring the technology
licensing program. DuraSwitch has also incurred additional costs related to
being a reporting public company including investor relation activities.
Research and Development:
Research and development expenses were $366,730 for the 2000 Period,
compared to $104,634 for the 1999 Period. The increased costs were attributed to
additional engineering personnel and equipment for development, refinement and
testing of new product applications for our patented technologies.
Loss from Operations:
As a result of the factors described above, loss from operations
increased to $1,087,048 for the 2000 Period, compared to $467,674 for the 1999
Period.
Other Expense/Income:
Net other income was $52,356 for the 2000 Period, compared to net other
income of $17,558 for the 1999 Period. The increased income resulted from the
investment of cash we received from our public equity offering on September 1,
1999.
Net Loss:
As a result of the factors described above, net loss was $1,034,692 for
the 2000 Period, compared to $450,116 for the 1999 Period.
<PAGE> 7
LIQUIDITY AND CAPITAL RESOURCES
The current ratio on March 31, 2000 was 7.1 to 1, compared to 5.5 to 1
on December 31, 1999. Working capital on March 31, 2000 was $4,776,053, compared
to $5,652,332 on December 31, 1999. The decrease in working capital is primarily
attributable to cash used in operations.
Net cash used in operating activities for the three months ended March
31, 2000 was $1,485,045, consisting primarily of net operating losses, an
increase in accrued expenses and accounts receivable (the increase in accounts
receivable was driven by the Ericsson resolution of $340,000), which was
partially offset by depreciation and a decrease in inventory.
Net cash used in investing activities for the three months ended March
31, 2000 was $69,427, consisting primarily of purchases of property and
equipment.
Net cash used by financing activities for the three months ended March
31, 2000 was $23,977, consisting primarily of proceeds from a $147,263 common
stock note receivable offset by payments on a $150,000 note payable to
shareholder and payment of $25,000 against our bank line of credit.
In December 1998, we obtained a $150,000 bank line of credit. In May
1999, we renegotiated the line of credit, which allows us to borrow up to a
total of $250,000 at the lender's prime rate plus 2% and matures in May 2000.
Outstanding borrowings on the line of credit are secured by a lien on our
inventory, accounts receivable and bank accounts. As of March 31, 2000, $50,000
was outstanding under the line of credit.
As part of the Aztec acquisition, a subsidiary that was acquired in
January of 1998, we assumed a note payable, due March 31, 2002, which requires
monthly payments of principal and interest of $4,536 with interest at 13.2% per
year. This note is secured by a lien on some of our property and manufacturing
equipment. As of March 31, 2000, we owed $93,870 on this note payable. Also in
connection with the Aztec acquisition, we assumed an unsecured note payable to
one of Aztec's former shareholders, due January 31, 2000, which carried imputed
interest at 8.0% per year. In January 2000, this note payable was paid in full.
During the three months ended March 31, 2000, we entered into one
capital lease for the purchase of property and equipment. As of March 31, 2000,
future principal payments under our existing capital leases were approximately
$121,930. These capital leases bear interest at rates ranging from 11.7% to
24.0%.
At December 31, 1999, we had approximately $5,650,000 in net operating
loss carry forwards available for federal income tax purposes. We have not
recognized any benefit from these operating loss carry forwards, which are
subject to significant restriction under current tax law and begin to expire in
2011.
As of March 31, 2000, we had purchase orders outstanding in the amount
of approximately $1.1 million. We received payment of $340,000 during April 2000
for the Ericsson cancelled purchase order previously disclosed.
We have experienced significant operating losses since our inception.
We expect our capital expenditure and working capital requirements in the
foreseeable future to increase depending on the rate of our expansion, our
operating results, and other adjustments in our operating plan as needed in
response to competition or unexpected events. We believe that the net proceeds
from our recent public offering, together with available borrowings and our
current cash and cash equivalents, will be sufficient to meet our anticipated
cash needs for working capital, capital expenditures and required debt payments
through fiscal 2000. If we are unable to meet our liquidity requirements or if
our liquidity requirements increase, we may require additional financing. The
sale of additional equity or convertible debt securities could result in
additional dilution to our stockholders. There can be no assurance that
financing will be available in sufficient amounts or on terms we find
acceptable, if at all.
<PAGE> 8
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITY
None.
ITEM 5. OTHER INFORMATION
Effective March 31, 2000, we resolved the Ericsson purchase order
cancellation discussed in our 10-KSB annual report. This resolution was based on
Ericsson's acknowledgement of financial responsibility for the cancellation of a
purchase order dated April 7, 1999 between Ericsson and DuraSwitch for the
custom design of a compact mode selector/volume control rotary type switch.
Ericsson agreed to pay and DuraSwitch accepted $340,000 as an equitable
resolution for the cancelled purchase order.
On April 14, 2000, we granted a non-exclusive license for our patented
PushGate push button switch to Memtron Technologies, a subsidiary of Korry
Electronics Co.
On April 14, 2000, we granted a non-exclusive license for our patented
push button switch to Jayco Interface Technology, a manufacturer of
ultra-high-quality operator interfaces.
On April 20, 2000, Delphi Automotive Systems LLC signed a licensing
agreement with DuraSwitch Industries Inc. for exclusive rights to utilize and
manufacture our magnetically coupled switch technology for the automotive
industry. The initial term of the agreement runs through June 30, 2007 and
during this period Delphi is required to pay minimum aggregate royalties of $12
million to DuraSwitch.
The Delphi licensing agreement calls for Delphi to pay us a $4 million
exclusive license fee due on or before May 20, 2000, which is nonrefundable and
not creditable against royalties.
On April 20, 2000, we also granted a warrant to Delphi to purchase
225,000 shares of our common stock at $7.00 per share. This warrant may be
exercised at any time before 11:59 p.m. on April 20, 2002, or 11:59 p.m. on
April 20, 2004 if Delphi exercises its short-term option for our stock dated
April 20, 2000 and detailed below.
On April 20, 2000, we executed a short-term option agreement with
Delphi to purchase 1.65 million shares of non-registered common stock at $7.00
per share. The option expires June 30, 2000. The combination of the warrants to
purchase 225,000 shares and the 1.65 million shares is approximately 19.9% of
our outstanding common stock, upon their exercise.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See attached exhibit list
(b) Reports on Form 8-K
On April 26, 2000, DuraSwitch filed a current report on Form 8-K with
the SEC pursuant to Item 5 thereof, in respect to the license, option and
warrant transaction with Delphi Automotive System LLC described in Item 5 above.
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DuraSwitch Industries, Inc.
------------------------------------
(Registrant)
Date: May 10, 2000 By: /s/ R. Terren Dunlap
---------------------------------
R. Terren Dunlap, Chief Executive
Officer and
Chairman of the Board
(Principal Executive Officer)
Date: May 10, 2000 By: /s/ Robert J. Brilon
---------------------------------
Robert J. Brilon, President,
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
<PAGE> 10
EXHIBIT INDEX
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Exhibit Incorporated by
No. Description Reference to: Filed Herewith:
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3.1 Amended and Restated SB-2 filed with the SEC
Articles of Incorporation of Registrant on August 26, 1999
3.2 Amended and Restated Bylaws Form 10-QSB filed with SEC on
November 15, 1999
4.1 Articles 3, 4, 5, and 7 of the Form SB-2 filed with the SEC
Amended and Restated on August 26, 1999
Articles of Incorporation of
DuraSwitch Industries, Inc.
(included in Exhibit 3.1)
4.2 Articles II, III, and VII of the Form SB-2 filed with the SEC
Amended and Restated on August 26, 1999
Bylaws of DuraSwitch
Industries, Inc.
(included in Exhibit 3.1)
4.3 Specimen Common Stock Form SB-2 filed with the SEC
Certification on August 26, 1999
10.1 Employment and Separation Form SB-2 filed with the SEC on
Agreement dated May 1, 1997 August 26, 1999
by and between Registrant and
R. Terren Dunlap
10.1.1 July 30, 1999 Amendment to Form SB-2 filed with the SEC on
R. Terren Dunlap Employment August 26, 1999
Separation Agreement
10.2 Employment and Separation Form SB-2 filed with the SEC on
Agreement dated May 1, 1997 August 26, 1999
by and between Registrant and
Anthony J. Van Zeeland
10.2.1 July 30, 1999 Amendment to Form SB-2 filed with the SEC on
Anthony J. Van Zeeland Employment August 26, 1999
Separation Agreement
10.3 Employment and Separation Form SB-2 filed with the SEC on
Agreement dated November 20, 1998 August 26, 1999
by and between DuraSwitch Industries,
Inc. and J. Thomas Webb
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10.4 Employment and Form SB-2 filed with the SEC on
Separation Agreement dated August 26, 1999
November 20, 1998 by and between
DuraSwitch Industries, Inc.
and Robert J. Brilon
10.4.1 Addendum #1 to Employment and Form 10-KSB filed with SEC on
Separation Agreement dated March 30, 2000
November 20, 1998 by and between
DuraSwitch Industries, Inc.
and Robert J. Brilon
10.5 1997 Stock Option Plan Form SB-2 filed with the SEC on
August 26, 1999
10.6 Form of Grant Letter pursuant to 1997 Form SB-2 filed with the SEC on
Stock Option Plan August 26, 1999
10.7 1999 Stock Option Plan Form SB-2 filed with the SEC on
August 26, 1999
10.8 Form of Representative's Warrants Form SB-2 filed with the SEC on
August 26, 1999
10.9 Series A Convertible Stock and Warrant Form SB-2 filed with the SEC on
Purchase Agreement dated June 30, August 26, 1999
1998 by and among DuraSwitch
Industries, Inc. and Blackwater
Capital Partners, L.P. and
Blackwater Capital Group, L.L.C.
10.10 Registration Rights Agreement dated Form SB-2 filed with the
SEC on June 30, 1998, by and between August 26, 1999
DuraSwitch Industries, Inc. and Blackwater
Capital Group, L.L.C.
10.11 Registration Rights Agreement dated Form SB-2 filed with the
SEC on June 30, 1998, by and between August 26, 1999
DuraSwitch Industries, Inc. and Blackwater
Capital Partners, L.P.
10.12 Letter agreement dated May 14, 1998, Form SB-2 filed with the
SEC on as amended July 14, 1998, by and August 26, 1999
between DuraSwitch Industries, Inc. and
Duff & Phelps Securities, LLC
10.12A Agreement to terminate dated Form 10-QSB filed with SEC on
September 13, 1999 between November 15, 1999
DuraSwitch Industries, Inc.
and Duff & Phelps Securities, LLC
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<PAGE> 12
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10.13 Promissory Note of DuraSwitch Form SB-2 filed with the SEC on
Industries, Inc. dated January 30, 1998, August 26, 1999
and amended December 31, 1998, in
The aggregate amount of $164,000
Payable to Anthony G. Shumway
10.14 Warrant to Purchase 42,871 shares Form SB-2 filed with the SEC
on of Common Stock of DuraSwitch August 26, 1999
Industries, Inc. issued June 30, 1998 and
held by Duff & Phelps Securities, LLC
10.15 Standard Sublease dated October 15, Form SB-2 filed with the
SEC on 1998, as amended February 2 ,1999, August 26, 1999
by and between 234 South Extension, L.L.C.
and DuraSwitch Industries, Inc.
10.16 Management Services Agreement Form SB-2 filed with the SEC on
dated May 1, 1997 by and between August 26, 1999
Total Switch, Inc. and VanDun, LLC
10.17 Agreement for Assignment of Present Form SB-2 filed with the SEC on
and Future Inventions in Certain August 26, 1999
Subject Matter dated May 1, 1997 by
And between Total Switch, Inc. and
Anthony J. Van Zeeland
10.18 Ericsson, Inc. purchase order dated Form SB-2 filed with the SEC on
April 7, 1999 (portions of the exhibit August 26, 1999
have been omitted pursuant to a
request for confidential treatment)
10.18.1 Cancellation of Ericsson, Inc. Form 10-KSB filed with the SEC on
purchase order dated April 7, 1999 March 30, 2000
10.19.1 Licensing Agreement between Delphi Form 8-K filed with the SEC on
Automotive Systems LLC and April 26, 2000.
DuraSwitch Industries Inc dated April
20, 2000
27 Financial Data Schedule X
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-QSB FOR THE THREE MONTHS ENDED
03-31-00 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,306,378
<SECURITIES> 0
<RECEIVABLES> 618,038
<ALLOWANCES> (40,000)
<INVENTORY> 427,072
<CURRENT-ASSETS> 5,557,109
<PP&E> 871,993
<DEPRECIATION> (242,588)
<TOTAL-ASSETS> 6,925,340
<CURRENT-LIABILITIES> 781,056
<BONDS> 128,634
0
0
<COMMON> 7,520
<OTHER-SE> 6,008,130
<TOTAL-LIABILITY-AND-EQUITY> 6,925,340
<SALES> 724,851
<TOTAL-REVENUES> 724,851
<CGS> 789,374
<TOTAL-COSTS> 789,374
<OTHER-EXPENSES> 1,022,525
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (52,356)
<INCOME-PRETAX> (1,034,692)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,034,692)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,034,692)
<EPS-BASIC> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
