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 June 30, 1996.
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. For the Transition Period to
Commission File Number 2-31438
NUKO Information Systems, Inc.
- - - --------------------------------------------------------------------------------
New York 16-0962874
- - - --------------------------------- ------------------------------------
(State of Other Jurisdiction or (I.R.S. Employer Identification No.)
Incorporation or Organization)
2235 Qume Drive, San Jose, California 95131
- - - --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(408) 526-0288
-------------------------------------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest feasible date:
CLASSES Outstanding as of August 9, 1996
- - - ----------------------------------- -------------------------------------
Common Stock ($0.001 par value) 10,409,098
<PAGE>
<TABLE>
NUKO Information Systems, Inc.
Index to Quarterly Report on Form 10-QSB
For the Period Ended June 30, 1996
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
- - - ------ -------------------------------------------------------------- --------
<S> <C> <C>
Item 1 Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995. 3
Condensed Consolidated Statement of Operations
Three Months Ended June 30, 1996 and 1995. 5
Condensed Consolidated Statement of Operations
Six Months Ended June 30, 1996 and 1995. 6
Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 1996 and 1995. 7
Notes to Condensed Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II OTHER INFORMATION
- - - ------ -------------------------------------------------------------- --------
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 16
SIGNATURE 17
- - - --------------------------
</TABLE>
2
<PAGE>
NUKO Information Systems, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
June 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 6,374,415 $11,255,820
Short term investments 2,654,273 -
Accounts receivable, trade 1,061,895 120,000
Receivables from officers/directors - 27,931
Share subscriptions receivable including
interest of $30,567 at December 31, 1995 - 341,967
Inventories (net) 1,497,092 758,552
Other current assets 364,669 110,762
-------------------------------
Total Current Assets 11,952,344 12,615,032
Property and Equipment (Net) 1,637,041 459,497
Other Assets 9,783 253,340
-------------------------------
TOTAL ASSETS $13,599,168 $13,327,869
===============================
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
NUKO Information Systems, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont'd.)
<CAPTION>
June 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,823,790 $ 1,319,959
Accrued liabilities - 108,719
Current portion -- capital lease obligation 125,701 95,273
--------------------------------
Total current liabilities 2,949,491 1,523,951
Senior notes - 325,000
Capital lease obligation 100,106 101,686
-------------------------------
Total liabilities 3,049,597 1,950,637
SHAREHOLDERS' EQUITY:
Common stock, $0.001 par value, 20,000,000 shares
authorized: 10,409,098 shares issued and outstanding
at June 30, 1996; and 9,128,418 shares issued and
outstanding at December 31, 1995 10,409 9,128
Additional paid-in capital 20,507,113 15,741,718
Accumulated deficit (9,967,951) (4,373,614)
-------------------------------
Total shareholders' equity 10,549,571 11,377,232
-------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,599,168 $13,327,869
===============================
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
NUKO Information Systems, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended June 30,
1996 1995
--------------- ---------------
<S> <C> <C>
Net sales $ 2,162,867 $ -
Cost and Expenses:
Cost of sales 1,389,909 -
Research and development 1,524,143 233,155
Selling, general and administrative expenses 1,890,342 154,501
------------------------------
4,804,394 387,656
------------------------------
Loss from operations (2,641,527) (387,656)
Other income (expense), net 111,965 (35,870)
-------------------------------
Net loss (2,529,562) (423,526)
==============================
Net loss per share ($0.25) ($0.17)
==============================
Weighted average shares outstanding 10,256,785 2,528,000
==============================
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
NUKO Information Systems, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Six Months Ended June 30,
1996 1995
--------------- -------------
<S> <C> <C>
Net sales $ 2,637,280 $ -
Cost and Expenses:
Cost of sales 1,532,230 -
Research and development 3,712,190 561,752
Selling, general and administrative expenses 3,196,022 247,171
------------------------------
8,440,442 808,923
------------------------------
Loss from operations (5,803,162) (808,923)
Other income (expense), net 208,825 (56,584)
------------------------------
Net Loss (5,594,337) (865,507)
==============================
Net loss per share ($0.62) ($0.35)
==============================
Weighted average shares outstanding 8,976,242 2,496,000
==============================
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
NUKO Information Systems, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended June 30,
1996 1995
--------------- --------------
<S> <C> <C>
Operating activities
Net cash used in operating activities $ (5,663,406) $ (758,792)
Investing activities
Purchase of short term investments - Net (2,654,273)
Acquisitions of property and equipment (1,345,789) (38,658)
-------------------------------
Net cash used in investing activities (4,000,062) (38,658)
Financing activities
Issuance of common stock 5,108,643 4,000
Proceed (repayment) from notes payable and
long term debt (326,580) 1,050,000
-------------------------------
Net cash provided by (used) in
financing activities 4,782,063 1,054,000
-------------------------------
Decrease in cash and cash equivalents (4,881,405) 256,550
Cash and cash equivalents at beginning of period 11,255,820 372
------------------------------
Cash and cash equivalents at end of period $ 6,374,415 $ 256,922
===============================
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
7
<PAGE>
NUKO Information Systems, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
1. BASIS OF PRESENTATION
The accompanying, condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. Operating results
for the three months and six months ended June 30, 1996 and 1995 are
not necessarily indicative of the results that may be expected for a
full fiscal year. For further information, refer to the financial
statements and accompanying footnotes for the year ended December 31,
1995, included in the Company's Form 10-KSB submission.
2. REVENUE RECOGNITION
Generally, the company recognizes revenue when products are shipped.
Revenue resulting from specific contractual terms, including certain
product development agreements, is recognized in accordance with the
terms of the related contract.
3. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a purchase
maturity of three months or less to be cash equivalents. Cash
equivalents consists principally of commercial paper.
4. SHORT TERM INVESTMENTS
The Company accounts for its investments using Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities.
Management determines the appropriate classification of its investments
in debt securities at the time of purchase. Debt securities for which
the Company has both the intent and ability to hold to maturity are
classified as held to maturity. These securities are carried at
amortized cost. At June 30, 1996, the Company's short term investments
are all classified as held to maturity.
At June 30, 1996, the Company's investments in debt securities were
classified as cash and cash equivalents or short term investments. The
Company maintains cash and cash equivalents and short term investments
principally in commercial paper with a maturity date of less than
twelve months with various financial institutions. These financial
institutions are located in different areas of the United States and
Company practice is designed to limit exposure to any one institution.
8
<PAGE>
NUKO Information Systems, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
4. SHORT TERM INVESTMENTS (Cont'd)
The following is a summary of cash and cash equivalents and short term
investments by balance sheet classification for June 30, 1996 and
December 31, 1995:
June 30, December 31,
1996 1995
------------ ------------
Cash and cash equivalents:
Demand deposit accounts $ 430,228 $ 8,363,940
Commercial paper 5,944,187 -
U.S. Treasury Obligations - 2,891,880
-----------------------------
$ 6,374,415 $ 11,255,820
=============================
Short term investments:
Commercial paper $ 2,654,273 $ -
U.S. Treasury Obligations -----------------------------
$ 2,654,273 $ -
=============================
The estimated fair value of each investment approximates the amortized
cost and, therefore, there are no unrealized gains or losses as of June
30, 1996.
5. INVENTORIES
Inventories are started at the lower of cost (first-in, first-out) or
market. The components or inventory consists of the following:
June 30, December 31,
1996 1995
------------ ------------
Electronic parts and other components $ 421,743 $ 758,552
Work in progress - -
Finished Goods 1,706,063 -
-----------------------------
2,127,806 $ 758,552
Inventory Reserve (630,714) -
-----------------------------
$ 1,497,092 $ 758,552
=============================
9
<PAGE>
6. INCOME TAXES
The provision for income taxes at the Company's effective tax rate
differed from income taxes at the statutory rate due to the increase in
deferred tax allowance and net operating losses not being benefited.
7. SOFTWARE DEVELOPMENT COSTS
Software development costs are capitalized once technological
feasibility has been established and all research and development
activities for other components of the product have been completed.
There were no software development costs capitalized at June 30, 1996.
8. STOCK OPTIONS
The Company accounts for its employee stock option plans in accordance
with Accounting Principle Board Opinion No. 25, Accounting for Stock
Issued to Employees ("APB 25"). Under APB 25, no compensation expense
has been recognized since the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the
date of grant.
10
<PAGE>
NUKO Information Systems, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially
from those anticipated as a result of certain factors, including those
set forth in Item 5 of this report and in the Company's Current Report
on Form 10-KSB.
NET SALES AND NET LOSS
Net sales for the second quarter are $2.2 million compared to no sales
for the same period in 1995. Sales for the six month period ended June
30, 1996 are $2.6 million compared to no sales for the same period in
the prior year. Sales for the quarter included shipment of the
Company's products, rental of Highlander equipment and software
maintenance revenue. Sales for the quarter and six months ended June
30, 1996 increased primarily as a result of the introduction of the
Highlander product. The net loss for the quarter is $2.5 million or
$0.25 per share, compared to a net loss of $0.4 million or $0.17 per
share for the same period in 1995. The net loss for the six month
period ended June 30, 1996 is $5.6 million or $0.62 per share compared
to a loss of $0.9 million or $0.35 per share for the same period in
1995. Net losses reflect the Company's continued investment in research
and development as well as adding personnel to enable the Company to
support the customer requirements.
COST OF SALES
Cost of sales for the second quarter of 1996 was $1.4 million compared
to no cost of sales for the same period in 1995. Cost of sales for the
six month period ended June 30, 1996 was $1.5 million compared to no
cost of sales for the same period in the prior year. The gross margin
resulting from the cost of sales as a percentage of net sales was 36%
for the quarter and 42% for the six month period ended June 30, 1996.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expenses for the second quarter of 1996 were
$1.5 million compared to $0.2 million for the same period in 1995.
Research and development expenses for the six month period ended June
30, 1996 were $3.7 million compared to $0.6 million for the same period
in 1995. The increase in the current year reflects the Company's
commitment to invest in the development and enhancement of its
Highlander and other product lines.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the second quarter of
1996 were $1.9 million compared to $0.2 million for the same period in
1995. Expenses for the six month period ended June 30, 1996 was $3.2
million compared to $0.2 million for 1995. The expenses increased as a
result of adding marketing and other personnel is connected with the
introduction of the Highlander product.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation (Cont'd.)
RECENT ACCOUNTING PRONOUNCEMENTS
During March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" (SFAS No. 121), which requires the Company to review for
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In certain situations, an impairment loss would be
recognized. SFAS No. 121 is effective for the Company's fiscal year
1996. The Company has studied the implications of the statement and
does not expect it to have a material impact on the Company's financial
condition or results of operations.
During October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123). This accounting standard
permits the use of either a fair value based method or the current
Accounting Principals Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB No. 25) when accounting for stock-based
compensation arrangements. Companies that do not follow the new fair
value based method will be required to disclose pro forma net income
and earnings per share computed as if the fair value based method has
been applied. The disclosure provisions of SFAS No. 123 are effective
for fiscal years beginning after December 15, 1995. Management has
adopted APB No. 25 to account for its stock options plans.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, which consist of investments in demand
deposits, commercial paper and U.S. Treasury obligations with
maturities of less than 90 days and short-term investments, which
consist of commercial paper and U.S. Treasury obligations with
maturities of less than 360 days decreased approximately $2.2 million
during the six month period ended June 30, 1996. In February, 1996, the
Company completed the private placement of 822,500 shares of common
stock which generated approximately $3.9 million in proceeds, net of
associated fees, commission and expenses. The Company ended the quarter
with a cash and cash equivalent balance of $9.0 million compared to a
balance of $11.3 million at December 31, 1995.
During the period, which ended June 30, 1996, cash required for
research and development and other operating activities represented the
majority of the decrease. Cash required for equipment purchases was
offset by collections of accounts receivable.
Based on the current projections of operations, management believes
that cash and cash equivalents at June 30, 1996 will be adequate to
meet its capital requirements in 1996. However, no assurance can be
given that this will be the case. The Company may from time to time
seek to raise capital from additional sources, including extension of
its current lending facility and additional public or private debt or
equity financing. There can be no assurance that, in the event
additional financing is required, the Company will be able to raise
such financing on acceptable terms or at all. In such event, the
Company would consider appropriate financing alternatives.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation (Cont'd.)
OTHER FINANCIAL INFORMATION
The Company's backlog includes sales orders received by the Company
that have a scheduled delivery date prior to June 30, 1997. The
aggregate sales price of orders received and included in backlog was
approximately $3.3 million at June 30, 1996. The Company believes the
orders included in the backlog are firm orders and will be shipped
prior to June 30, 1997. However, some orders may be canceled by the
customer without penalty.
13
<PAGE>
NUKO Information Systems, Inc.
PART II OTHER INFORMATION
Item 5. Other Information
RISK FACTORS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this
document, and any document referenced herein, are advised that
this document and documents referenced herein contain both
statements of historical facts and forward looking statements.
Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ
materially from those indicated by the forward looking
statements.
Ownership of the Company's common stock is subject to a number
of risks including the following: The Company's business is
directly impacted by capital spending and funding of the
Regional Bell Operating Companies and other major customers in
the telecommunications industry. The capital budgets of these
customers or potential customers is beyond the control of the
Company and can be impacted by numerous factors completely
unrelated to the performance, quality or price of the
Company's products. In recent years, the purchasing behavior
of the Company's customers has increasingly been characterized
by the use of large contracts with fewer suppliers. This trend
is expected to intensify and will contribute to the
variability of the Company's results. Such larger purchase
contracts typically involve longer negotiating cycles, require
dedication of substantial amounts of working capital and other
resources and, in general, require investments which may
substantially precede recognition of associated revenues.
Moreover, in return for larger, longer-term purchase
agreements, customers often demand more stringent acceptance
criteria which may also cause revenue recognition delays. For
example, customers that request product be priced based on
volume estimates of customer's future requirements, but the
failure of such customers to take delivery of product
comparable to volume anticipated, could result in lower
margins on product revenue.
The Company has to date sold its initial product only in
limited quantities primarily for use in development,
demonstration and testing of prototypes. Certain contracts may
relate to new technologies which may not have been previously
deployed on a large-scale commercial basis. The Company's
products are based on technologies that have not been widely
deployed and there can be no assurance that the Company will
be able to market successfully its initial products to
generate the increased revenues necessary to sustain full
scale commercial production or that the Company's products
will be well received when introduced into the marketplace on
a full commercial scale.
14
<PAGE>
NUKO Information Systems, Inc.
Item 5. Other Information
RISK FACTORS (Cont'd.)
The Company competes against many larger companies that have
significantly greater resources than the Company. There is no
assurance that the Company will be able to compete
successfully with such other companies. The Company, which has
an accumulated deficit of approximately $10.0 million as of
June 30, 1996, has never been profitable and may never achieve
profitability. The Company may require additional capital and
may not be able to raise such capital or may be able to raise
such capital only on unfavorable terms.
The ability of the Company to compete effectively depends on
its ability to attract and retain highly skilled key
employees. The loss of key personnel could have a material
adverse effect on the Company's business. The Company believes
that, as its requirements change in character, it will be
necessary to retain the services of additional, experienced
personnel. Competition for such personnel is intense and there
is no assurance that these people will be available when
required.
Since early 1994, the Company has been engaged in research and
development of its technologies, product design and
establishment of strategic alliances on which the Company
expects to depend for manufacturing, sales and distribution of
its products. The Company has not yet begun to generate
significant revenues from the commercialization of products.
Moreover, management of the Company has limited experience
with the distribution of technologically-complex products in
commercial quantities and there can be no assurance that the
Company will be able to make the necessary adaptations to
successfully move from the research and development stage to
full commercial production and distribution.
15
<PAGE>
NUKO Information Systems, Inc.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11.1 Calculation of Net Loss Per Share
b) Reports on Form 8-K
1. Form 8-K was filed on May 24, 1996 to report interim
financial results.
2. Form 8-K was filed on August 2, 1996 to dismiss the
independent accountant with no disputes.
16
<PAGE>
NUKO Information Systems, Inc.
SIGNATURE
Pursuant to the requirement 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.
NUKO INFORMATION SYSTEMS, INC.
DATE: 8/14/96 By: /s/ John H. Gorman
------------------- ----------------------------
NAME: John H. Gorman
TITLE: Chief Financial Officer
17
<PAGE>
NUKO Information Systems, Inc.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- - - ----------- ----------- ----
11.1 Calculation of Net Loss Per Share 19
18
NUKO Information Systems, Inc.
Exhibit 11.1 Calculation of Net Loss per Share for Three Month Period Ended
June 30
<TABLE>
Earnings per share is computed using the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent shares
result from the assumed exercise of outstanding stock options that have a
dilutive effect when applying the treasury stock method.
<CAPTION>
1996 1995
----------------- ------------------
PRIMARY LOSS PER SHARE
<S> <C> <C> <C>
Net loss for period $ 2,529,562 $ 423,526
======================================
Shares outstanding at the beginning 10,250,918 5,541,473
of the period
Weighted average effect of shares - 1,670
issued during period
Weighted average effect of warrants 5,867 -
and options exercised in the period
Weighted average effect of share - -
subscriptions paid in the period
Weighted average effect of shares - -
issued for services
Weighted average effect of debt to - -
equity conversion
Weighted average effect of share - (3,014,347)
subscriptions (excluded due to anti-
dilutive effect) --------------------------------------
Weighted average shares outstanding 10,256,785 2,528,796
======================================
Primary loss per share $ (0.25) $ (0.17)
======================================
</TABLE>
19
<PAGE>
NUKO Information Systems, Inc.
Exhibit 11.1 Calculation of Net Loss per Share for Six Month Period Ended
June 30 (Cont'd)
<TABLE>
Earnings per share is computed using the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent shares
result from the assumed exercise of outstanding stock options that have a
dilutive effect when applying the treasury stock method.
<CAPTION>
1996 1995
----------------- ------------------
<S> <C> <C>
PRIMARY LOSS PER SHARE
Net loss for period $ 5,594,337 $ 865,507
======================================
Shares outstanding at the beginning 9,128,418 5,413,941
of the period
Weighted average effect of shares 551,346 31,483
issued during period
Weighted average effect of warrants 190,845 -
and options exercised in the period
Weighted average effect of share (894,367) -
subscriptions paid in the period
Weighted average effect of shares - 13,491
issued for services
Weighted average effect of debt to - 10,218
equity conversion
Weighted average effect of share - (3,014,347)
subscriptions (excluded due to anti-
dilutive effect) --------------------------------------
Weighted average shares outstanding 8,976,242 2,454,786
======================================
Primary loss per share $ (0.62) $ (0.35)
=======================================
</TABLE>
20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,374,415
<SECURITIES> 2,654,273
<RECEIVABLES> 1,062,094
<ALLOWANCES> 0
<INVENTORY> 1,497,092
<CURRENT-ASSETS> 364,669
<PP&E> 1,903,501
<DEPRECIATION> 266,460
<TOTAL-ASSETS> 13,599,367
<CURRENT-LIABILITIES> 2,949,491
<BONDS> 0
<COMMON> 10,409
0
20,507,113
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,599,367
<SALES> 0
<TOTAL-REVENUES> 2,162,867
<CGS> 1,389,909
<TOTAL-COSTS> 4,804,394
<OTHER-EXPENSES> (111,965)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,529,562)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,529,562)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.00)
</TABLE>
