SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period July 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission file no. 0-7642
------
MEGADATA CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
New York 11-2208938
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
47 Arch Street, Greenwich, Connecticut 06830
- -------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 629-8757
--------------
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
-----
======================================================================
Common shares $.01 par value - The number of common shares outstanding as
at September 14, 1999 was 2,511,600 (Exclusive of 691,500 shares in treasury)
<PAGE>
Megadata Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1999 1998
(UNAUDITED)
----------- -----------
ASSETS
Current assets:
<S> <C> <C>
Cash $ 14,486 $ 17,731
Accounts receivable 426,021 35,341
Inventories 386,766 266,916
Prepaid expenses and other current assets 46,252 58,931
----------- -----------
Total current assets 873,525 378,919
Property, plant and equipment, net 1,500,836 1,382,745
Other assets 45,599 33,326
=========== ===========
$ 2,419,960 $ 1,794,990
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 271,587 $ 136,016
Accrued expenses and taxes 295,955 354,439
Accrued expenses--related parties 43,512 13,898
Notes payable--related party 625,000 175,000
Deferred income 105,645 90,519
Installment note payable 13,448 33,230
Current portion of long-term debt 62,559 58,382
----------- -----------
Total current liabilities 1,417,706 861,484
Notes payable--related party, less current portion 575,000 25,000
Installment note payable, less current portion 32,291 37,894
Long-term debt 515,199 562,654
----------- -----------
2,540,196 1,487,032
Stockholders' equity (deficiency):
Common shares--authorized 10,000,000 shares, par value
$.01 per share; issued 3,203,100 shares in 1999 and 1998 32,031 32,031
Additional paid-in capital 2,460,653 2,460,653
Accumulated deficit (995,695) (567,501)
----------- -----------
1,496,989 1,925,183
Less cost of 691,500 common shares held in treasury 1,617,225 1,617,225
----------- -----------
Total stockholders' equity (deficiency) (120,236) 307,958
=========== ===========
$ 2,419,960 $ 1,794,990
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 2 of 14
<PAGE>
Megadata Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JULY 31,
1999 1998
-----------------------------
Revenues:
<S> <C> <C>
Net sales $ 904,837 $ 848,269
Service 19,768 44,413
----------- -----------
Total revenues 924,605 892,682
Cost and expenses:
Cost of sales 343,368 512,675
Cost of service 57,763 54,618
Research and development 91,337 91,355
General and administrative expenses 766,253 385,121
----------- -----------
1,258,721 1,043,769
----------- -----------
Loss from operations (334,116) (151,087)
Other income (expense):
Interest income 1,480 7,008
Interest expense (44,458) (46,481)
Interest expense--related party (51,100) (11,368)
Other income -- 80
=========== ===========
Net loss $ (428,194) $ (201,848)
=========== ===========
Net loss per common share--basic
and diluted $ (.17) $ (.08)
=========== ===========
Weighted average number of common shares
outstanding--basic and diluted 2,511,600 2,511,600
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 3 of 14
<PAGE>
Megadata Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JULY 31,
1999 1998
-----------------------------
Revenues:
<S> <C> <C>
Net sales $ 526,526 $ 214,896
Service 5,240 6,614
----------- -----------
Total revenues 531,766 221,510
Cost and expenses:
Cost of sales 128,148 152,941
Cost of service 18,539 16,680
Research and development 30,230 31,140
General and administrative expenses 256,278 146,725
----------- -----------
433,195 347,486
----------- -----------
Income (loss) from operations 98,571 (125,976)
Other income (expense):
Interest income 420 1,424
Interest expense (14,486) (15,403)
Interest expense--related party (24,538) (487)
Other income -- --
=========== ===========
Net income (loss) $ 59,967 $ (140,442)
=========== ===========
Net income (loss) per common share--basic
and diluted $ .02 $ (.06)
=========== ===========
Weighted average number of common shares
outstanding--basic and diluted 2,511,600 2,511,600
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 4 of 14
<PAGE>
Megadata Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JULY 31,
1999 1998
---------------------------
Cash flows from operating activities
<S> <C> <C>
Net income (loss) $ (428,194) $ (201,848)
Adjustment to reconcile net (loss) income to net cash
used in operating activities:
Depreciation 51,238 55,414
Changes in operating assets and liabilities:
Accounts receivable (390,680) 255,875
Inventories (119,850) 31,381
Prepaid expenses and other current assets 12,679 (4,766)
Other assets (12,273) (41,097)
Accounts payable 135,571 (71,518)
Accrued expenses and other current liabilities (13,743) (90,268)
----------- -----------
Total adjustments (337,058) 135,021
----------- -----------
Net cash used in operating activities (765,252) (66,827)
Cash flows from investing activities
Capital expenditures (169,329) (20,106)
----------- -----------
Net cash used in investing activities (169,329) (20,106)
Cash flows from financing activities
Decrease in other assets--deferred mortgage cost -- 4,409
Proceeds from notes payable--related party 1,075,000 --
Payments of notes payable - related party (75,000) (164,215)
Payments of installment note (25,386) 49,228
Payments of long-term debt (43,278) (39,468)
----------- -----------
Net cash provided by (used in) financing activities 931,336 (150,046)
----------- -----------
Decrease in cash (3,245) (236,979)
Cash--at beginning of fiscal year 17,731 318,595
=========== ===========
Cash--at July 31, 1999 $ 14,486 $ 81,616
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 5 of 14
<PAGE>
Megadata Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
July 31, 1999
1. BUSINESS
Megadata Corporation (the "Company") designs and manufactures specialized
computer equipment with applications in the aviation and communication
industries. Its product line includes: PASSUR (Passive Secondary Surveillance
Radar) systems which monitor air traffic in real time: SA9600 Wireless Radio
Moderns: MURS, ALCX and RESNET airline reservation access systems; as well as
customized hardware and software which enable the Company's products to fit its
customers' specific requirements.
2. BASIS OF PRESENTATION
The financial information contained in this Form 10-Q represents condensed
financial data and, therefore, does not include all footnote disclosures
required to be included in financial statements prepared in conformity with
generally accepted accounting principles. Such footnote information was included
in the Company's annual report for the year ended October 31, 1998 on Form 10-K
filed with the SEC; the condensed financial data included herein should be read
in conjunction with that report. In the opinion of the Company, the accompanying
unaudited consolidated financial statements contain all adjustments necessary to
present fairly the consolidated balance sheet of Megadata Corporation at July
31, 1999 and the consolidated results of operations for the three and nine month
periods ended July 31, 1999 and 1998 and the consolidated statements of cash
flows for the nine months ended July 31, 1999 and 1998.
The results of operations for the interim periods stated above are not
necessarily indicative of the results of operations for the full fiscal year.
3. INVENTORIES
Inventories have been computed using the lower of cost (first-in, first-out
method) or market.
4. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the period between September 18, 1996 and June 6, 1997 the Company signed
agreements with a private investor (the "Investor") that provided for three
loans of $100,000 each, of which $200,000 was received in 1996 and $100,000 was
received in 1997. The three notes bore interest at a rate of 9% per annum, and
were payable by July 30, 1997. In addition,
Page 6 of 14
<PAGE>
as part of the above financings, stock warrants were awarded for the purchase of
up to 1,400,000 common shares at prices between $0.71 and $1.25 per share. The
warrants for 200,000 of such shares (at $0.75 per share) would only be
exercisable after the purchase by the Investor of the first 700,000 shares. The
warrant for an additional 500,000 of such shares (at $1.25 per share) becomes
exercisable from November 1, 2000 through October 31, 2001, assuming the prior
exercise of the 200,000 share warrant.
On June 6, 1997, the Investor and his affiliate purchased 700,000
shares for $0.71 per share, for a total of $500,000 ($400,000 in cash and
$100,000 by cancellation of the first $100,000 note).
On October 31, 1997, the Investor and two other directors purchased
200,000 shares for $150,000. The purchase of these shares made effective the
stock purchase warrant, that gives the Investor and his affiliates the right to
purchase 500,000 shares at $1.25 per share. This warrant expires October 31,
2001, and is exercisable during the year preceding expiration.
On July 30, 1997, the remaining notes totalling $200,000 were amended
and restated by a new note bearing interest at 9% per annum, with quarterly
payments of $25,000 plus accrued interest due on the last business day of each
calendar quarter, commencing December 31, 1997, with any remaining balance being
due July 30, 1999. The note is secured by the Company's assets excluding its
building.
During 1997, the Investor was elected a director of the Company and
Chairman of the Board. On October 2, 1998, the Investor was named to the
additional post of President and Chief Executive Officer.
During the first nine months of fiscal 1999, the Investor made
additional loans to the Company aggregating $1,075,000. The loans are evidenced
by promissory notes issued by the Company which are payable quarterly, maturing
at various dates from March 31, 2000 through March 31, 2001. The Investor
advanced the Company $50,000 subsequent to July 31, 1999. As of September 14,
1999, the total notes payable due to the Investor is $1,250,000.
During the quarter ended January 31, 1999, the Company reimbursed Field
Point Capital Management Company ("FPCM"), an entity controlled by the Investor,
for sales and marketing services approximating $27,000.
The Company is also leasing space from FPCM. During the nine months of
fiscal 1999, the lease expense aggregated $9,000. Effective February 1, 1999,
the lease expense is $1,000 per month on a month to month basis.
Page 7 of 14
<PAGE>
Megadata Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
REVENUE
- -------
Revenue during the nine months ended July 31, 1999, increased by
approximately $32,000, or 4%, as compared to the corresponding period ended July
31, 1998. Increases in revenues occurred in the following sales categories:
PASSUR Systems and PASSUR System maintenance contracts and miscellaneous
repairs. Decreases in revenue occurred in PASSUR Upgrades, Radio Modems,
Protocol Converters and UNIX Systems.
Revenue during the three months ended July 31, 1999, increased by
approximately $310,000, or 140%, as compared to the corresponding period ended
July 31, 1998. Increases in revenue resulted from PASSUR Systems, PASSUR
repairs, and PASSUR System maintenance. Decreases in revenues occurred in the
following sales categories: PASSUR System upgrades, Radio Modems, Protocol
Converters, and UNIX Systems.
The Company sold two PASSUR Systems during the third quarter of fiscal
1999. The Company has installed two other PASSUR units at major airports in the
first nine months of fiscal 1999 and will offer to sell the data which they
generate to airline customers and has plans to install an additional six units
at airports before the end of the current fiscal year. Management believes that,
with the increased sales and marketing effort for the PASSUR product line,
additional revenues from the sale of products and data services can be realized
in the coming fiscal year.
Management is reviewing product offerings and the performance of
product lines in which revenue has decreased over the last two fiscal years.
COST OF SALES AND SERVICE
- -------------------------
During the nine month period ending July 31, 1999, cost of sales
decreased by approximately $169,000, or 33%, over the same period of fiscal
1998. The decrease was due to the low level of PASSUR and other product sales in
the first two quarters of fiscal 1999. In addition, during the quarter ended
January 31, 1999, a significant portion of the manufacturing and service
production staff's time was redirected in an effort to prepare the Company's
building in Bohemia, New York, for sale.
During the quarter ended July 31, 1999, cost of sales decreased by
approximately $25,000, or 16%, over the same quarter of 1998. The decrease was
due to the low level of non PASSUR sales.
Page 8 of 14
<PAGE>
Cost of service was slightly higher for both the nine and three month
periods ending July 31, 1999 as compared to the same periods of 1998.
As a result of the restructuring underway by the Company (See Footnote
8 to the Company's Consolidated Financial Statements for the fiscal year ended
October 31, 1998), and the planned consolidation into smaller, less expensive
space, fixed costs should be reduced after the building is sold.
RESEARCH AND DEVELOPMENT
- ------------------------
The Company's research and development expenses remained approximately
the same in the first three quarters of fiscal 1999 as compared to the same
period in fiscal 1998. The Company anticipates continuing to incur research and
development expenditures approximately at current levels. Research and
development efforts include activities associated with the enhancement and
improvement of the Company's existing hardware and software.
GENERAL AND ADMINISTRATIVE
- --------------------------
General and administrative expenses increased by approximately
$381,000, or 99%, during the first nine months of fiscal 1999 as compared to the
same period in fiscal 1998, primarily due to the Company significantly
increasing the sales and marketing budget for its major PASSUR System product
line. As part of the increased sales and marketing effort, the Company hired a
Vice President of Sales and Marketing and a full time Controller, and also
retained the services of two sales consultants. The consultants were engaged
primarily to help optimize the benefits of the initial phase of the increased
marketing efforts under the direction of the Vice President of Marketing. The
two consultants' agreements terminated during the second quarter of fiscal 1999
and the Company did not renew them. Salaries, consulting, travel, as well as
advertising and promotion expenses accounted for most of the general and
administrative expense increase.
General and administrative expenses increased by approximately
$109,000, or 75%, during the third quarter of fiscal 1999 as compared to the
same period in fiscal 1998, primarily due to the Company significantly
increasing the sales and marketing budget for its major PASSUR System product
line. Salaries, consulting, travel, as well as advertising and promotion
expenses accounted for most of the general and administrative expense increase.
RESTRUCTURING CHARGE
In October 1998, the Company announced a restructuring plan in which it
will focus its attention primarily on its PASSUR line of passive radar systems.
As part of this restructuring, the Company moved its corporate headquarters and
national sales office to Greenwich, Connecticut. The Company has offered for
sale its building in Bohemia, New York, and has signed a contract with a
prospective buyer. After the building is sold, the Company will consolidate its
manufacturing and research and development facility into smaller space. (See
Footnote 8 to the Company's Consolidated Financial Statements for the fiscal
year ended October 31, 1998.)
Page 9 of 14
<PAGE>
NET LOSS
- --------
The Company incurred a net loss of $428,194, or $.17 per common share,
during the nine month period ended July 31, 1999. In the same period of fiscal
1998, the Company incurred a net loss of $201,848, or $.08 per common share.
The Company earned a net profit of $59,967, or $.02 per common share,
during the three month period ended July 31, 1999. In the same period of fiscal
1998, the Company incurred a net loss of $140,442, or $.06 per common share.
The Company's profit during the third quarter of fiscal 1999 is
reflective of the interest shown in the PASSUR product line as a result of the
increased marketing effort. Management anticipates the increased interest in
PASSUR and the sale of PASSUR data to continue. However, as anticipated by the
management of the Company, during the nine month period ended July 31, 1999,
costs and expenses were higher than total revenue. The lack of PASSUR related
sales in the first two quarters contributed to the lower revenue.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At July 31, 1999, the Company's current liabilities exceeded current
assets by $544,181. Management is addressing this working capital deficiency by
reducing operating expenses as outlined in its restructuring plan and, if
required, by obtaining external financing.
The Company has entered into a contract to sell the building which
houses its manufacturing facility in Bohemia, NY. The Company is presently
negotiating to lease back from the buyer the portion of the building it
presently occupies. The rental agreement, if concluded, will be entered into at
the closing. Both the sale and lease are anticipated to be finalized before the
end of fiscal 1999. If the sale is completed, the Company will utilize the cash
proceeds for working capital purposes.
Since the increased sales effort began in August 1998, the Company has
seen positive signs that its PASSUR product line could provide additional
revenue in fiscal 1999. However, the Company cannot predict if increased sales
will materialize. Increased competition, and continued budget constraints at its
clients, could impact this potential growth in revenue. If sales do not
increase, additional losses may occur and could continue. The extent of such
profits or losses will be dependent on the sales volume achieved.
THE YEAR 2000 ISSUE
- -------------------
The Company has diligently studied the impact of the Year 2000 on the
hardware and software it sells, as well as its own internal systems.
Page 10 of 14
<PAGE>
The Company's technical and development personnel have carefully
reviewed the Company's PASSUR hardware product line and related software and
have determined that they are Year 2000 compliant.
A review of Year 2000 compliance for the other products sold by the
Company, radio modems and protocol converters, is continuing and should be
completed by the fourth quarter of fiscal 1999.
A thorough review of the Company's internal systems with respect to
Year 2000 compliance is continuing and will be completed by October 31, 1999.
Remediation will be performed internally by existing employees and completed by
year end. No outside consulting services are expected to be required. The
Company is working with vendors and service providers with whom it does business
to determine their Year 2000 compliance to ensure that there is no adverse
effect on the Company. These studies are also scheduled for completion by
October 31, 1999.
To date, the Company has not found any area where a Year 2000
compliance problem with either its internal systems or outside providers could
have a material adverse impact on any part of the Company's business operations.
MARKET RISKS
- ------------
The Company does not have any significant financial instruments that
are sensitive to market risks.
RISK FACTORS; FORWARD LOOKING STATEMENTS
- ----------------------------------------
The Management's Discussion and Analysis and the information provided
elsewhere in this Quarterly Report on Form 10-Q (including, without limitation,
"Liquidity and Capital Resources" above) contain forward-looking statements
regarding the Company's future plans, objectives, and expected performance.
These statements are based on assumptions that the Company believes are
reasonable, but are subject to a wide range of risks and uncertainties, and a
number of factors could cause the Company's actual results to differ materially
from those expressed in the forward-looking statements referred to above. These
factors include, among others, the uncertainties related to the ability of the
Company to make new sales of its PASSUR and other product lines due to potential
competitive pressure from other companies or other products. Other uncertainties
which could impact the Company are uncertainties with respect to future changes
in governmental regulation affecting the product and its use in flight dispatch.
Additional uncertainties are related to the Company's ability to find and
maintain the personnel necessary to sell, manufacture, and service its products.
Page 11 of 14
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS.
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Shareholders at the Company's annual meeting on July 14, 1999, voted to
increase the amount of authorized shares of the Company's common stock from
5,000,000 to 10,000,000 shares. The issuance of common stock, or securities
convertible into common stock, on other than a pro rata basis would result in
the dilution of a present shareholder's interest in the Company.
Shareholders at the Company's annual meeting on July 14, 1999, also
approved an amendment to the Company's Articles of Incorporation which would
restrict, until November 30, 2000, direct and indirect transfers of Common Stock
that could result in the imposition of limitations on the use by the Company,
for federal income tax purposes, of net operating loss carryforwards and other
tax attributes that are and will be available to the Company, which is described
in more detail in the Company's Proxy Statement. The amendment will restrict a
shareholder's ability to acquire, directly or indirectly, additional stock of
the Company in excess of the specified limitations. Furthermore, a shareholder's
ability to dispose of his stock of the Company may be restricted as a result of
the amendment, and a shareholder's ownership of stock of the Company may become
subject to the amendment as a result of actions taken by persons related to that
shareholder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Shareholders at the Company's Annual Meeting on July 14, 1999 voted to:
(1) Re-elect the nominated Board of Directors as follows:
For Withhold
--- --------
G.S. Beckwith Gilbert 2,199,482 4,600
Richard R. Schilling 2,199,082 5,000
Yitzhak N. Bachana 2,198,382 5,700
Bruce N. Whitman 2,199,482 4,600
Paul L. Graziani 2,199,482 4,600
John R. Keller 2,198,582 5,500
Page 12 of 14
<PAGE>
(2) Approve the Company's 1999 Stock Incentive Plan which is described
in more detail in the Company's Proxy.
For Against Abstain
--- ------- -------
1,947,137 18,250 1,700
(3) Increase the amount of authorized shares of the Company's common
stock from 5 million to 10 million shares.
For Against Abstain
--- ------- -------
2,185,307 17,375 1,400
(4) Ratify the appointment of Ernst & Young, LLP, as the Company's
independent public accountants for the fiscal year ended
October 31, 1999.
For Against Abstain
--- ------- -------
2,100,688 2,400 1,000
(5) Approved an amendment to the Company's Articles of Incorporation
which would restrict, until November 30, 2000, direct and indirect
transfers of Common Stock that could result in the imposition of
limitations on the use by the Company, for federal income tax
purposes, of net operating loss carryforwards and other tax
attributes that are and will be available to the Company, which is
described in more detail in the Company's Proxy Statement.
For Against Abstain
--- ------- -------
1,834,812 118,875 3,400
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
NONE
Page 13 of 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Dated: September 14, 1999. /s/ G. S. Beckwith Gilbert
--------------------------
G. S. Beckwith Gilbert, Chairman,
President, and Chief Executive Officer
Dated: September 14, 1999. /s/ Herbert E. Shaver
---------------------
Herbert E. Shaver, Controller
(Principal Financial and Accounting Officer)
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000225628
<NAME> MEGADATA CORP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JUL-30-1999
<CASH> 14,486
<SECURITIES> 0
<RECEIVABLES> 426,021
<ALLOWANCES> 0
<INVENTORY> 386,766
<CURRENT-ASSETS> 873,525
<PP&E> 4,782,269
<DEPRECIATION> 3,281,433
<TOTAL-ASSETS> 2,419,960
<CURRENT-LIABILITIES> 1,417,706
<BONDS> 0
0
0
<COMMON> 32,031
<OTHER-SE> (152,267)
<TOTAL-LIABILITY-AND-EQUITY> 2,419,960
<SALES> 924,605
<TOTAL-REVENUES> 926,085
<CGS> 401,131
<TOTAL-COSTS> 1,258,721
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,558
<INCOME-PRETAX> (428,194)
<INCOME-TAX> 0
<INCOME-CONTINUING> (428,194)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (428,194)
<EPS-BASIC> (.17)
<EPS-DILUTED> (.17)
</TABLE>
