<PAGE>
<PAGE>
FORM 10-QSB
(Adopted in Release No. 34-30968 (72,439), effective August 13, 1992, 57
F.R. 36442; and amended in Release No. 34-31326 (85,051), effective October 22,
1992, 57 F.R. 48276.)
U. S. Securities and Exchange Commission
Washington, D.C. 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 September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 0-7762
AUDIO COMMUNICATIONS NETWORK. INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 52-0690530
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1000 Legion Place, Suite 1515, Orlando, Fl. 32801
(Address of principal executive office)
(407) 649-8877
(Issuer's telephone number)
(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
PROCEEDING 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 distribution of
securities under a plan confirmed by court. Yes [ ] No [ ] Not Applicable [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: 4,453,191
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
UNAUDITED STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
THIRD QUARTER
FOR THE 3 MONTHS ENDED
----------------------------
PART I -- FINANCIAL INFORMATION 9/30/97 9/30/96
- ------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Music Sales................................................. $ 3,720,965 $ 1,742,391
Installations............................................... 1,082,698 333,063
Equipment Sales............................................. 751,580 421,244
Labor & Service............................................. 59,760 85,958
------------ ------------
TOTAL REVENUE............................................... 5,615,003 2,582,656
COST AND EXPENSES
Cost of Sales............................................... 2,016,476 723,012
Selling, General and Administrative Expenses................ 1,772,689 615,084
Depreciation and Amortization............................... 1,178,208 589,046
------------ ------------
TOTAL....................................................... 4,967,373 1,927,142
------------ ------------
Operating Income............................................ 647,630 655,514
OTHER INCOME (EXPENSE):
Interest Income............................................. 32,266 0
Interest Expense............................................ (762,101) (484,847)
Other....................................................... (2,811) 0
------------ ------------
OTHER NET................................................... (732,646) (484,847)
------------ ------------
Income (Loss) before Income Taxes........................... (85,016) 170,667
Provision for Income Taxes.................................. 12,950 0
------------ ------------
Net Income (Loss)........................................... $ (97,966) $ 170,667
------------ ------------
------------ ------------
Net Income (Loss) Per Common Share (Proforma)............... $ (.02) $ .04
------------ ------------
------------ ------------
Dividends Per Share......................................... 0 0
------------ ------------
------------ ------------
</TABLE>
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
UNAUDITED STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
FIRST NINE MONTHS
FOR THE 9 MONTHS ENDED
----------------------------
PART I -- FINANCIAL INFORMATION 9/30/97 9/30/96
- ------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Music Sales................................................. $ 8,109,990 $ 5,012,415
Installations............................................... 1,928,851 1,078,184
Equipment Sales............................................. 1,594,812 1,482,857
Miscellaneous............................................... 159,973 227,125
------------ ------------
TOTAL REVENUE............................................... 11,793,626 7,800,581
COST AND EXPENSES
Cost of Sales............................................... 3,800,472 229,680
Selling, General and Administrative Expenses................ 3,931,094 2,577,917
Depreciation and Amortization............................... 2,606,978 1,782,180
------------ ------------
TOTAL....................................................... 10,338,544 4,589,777
------------ ------------
Operating Income............................................ 1,455,082 1,210,804
OTHER INCOME (EXPENSE):
Interest Income............................................. 33,938 0
Interest Expense............................................ (1,816,991) (1,430,559)
Other....................................................... (401) 0
------------ ------------
OTHER NET................................................... (1,783,454) (1,430,559)
------------ ------------
Income (Loss) before Income Taxes........................... (328,372) (219,755)
Provision for Income Taxes.................................. 17,550 0
------------ ------------
Net Income (Loss)........................................... $ (345,922) $ (219,755)
------------ ------------
------------ ------------
Net Income (Loss) Per Common Share (Proforma)............... $ (.08) $ (.05)
------------ ------------
------------ ------------
Dividends Per Share......................................... 0 0
------------ ------------
------------ ------------
</TABLE>
<PAGE>
<PAGE>
PART I
AUDIO COMMUNICATIONS NETWORK, INC, & SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 9 MONTHS
ENDED SEPTEMBER 30TH
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.................................................... $ (345,922) $ (219,755)
Adjustments to Reconcile Net Loss to Net Cash Provided by
Operating Activities
Depreciation and Amortization............................... 2,606,978 1,782,180
Amortization of Debt Discount............................... 0 7,172
Change in Operating Assets and Liabilities
Increase in Accounts Receivable........................ 277,486 (63,492)
Increase in Inventories................................ (1,355,515) (866,708)
(Increase) Decrease in Prepaid Expenses................ (98,295) 122,632
Increase (Decrease)in Deferred Commission Expense...... (287,955) (356,085)
Increase (Decrease)in Accounts Payable................. (206,658) 140,182
Increase (Decrease) in Accrued Expenses................ 432,304 (283,704)
----------- -----------
Net Cash Provided By Operating Activities................... 1,022,423 262,422
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Intangible Assets and Other.................. (752,920) (16,482)
Acquisition of Certain Assets and Liabilities of Chambers,
Inc....................................................... 0 (810,842)
Capital Expenditures........................................ (971,626) (864,932)
----------- -----------
Net Cash Used in Investing Activities....................... (1,724,546) (1,692,256)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Long Term Debt................................ 25,250,000 750,000
Repayments of Long Term Debt................................ (23,778,115) 0
Principal Payments Under Capital Lease Obligations.......... (43,149) (38,887)
Debt Issurance Costs........................................ 0 (3,750)
----------- -----------
Net Cash Provided by Financing Activities................... 1,428,736 707,363
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 726,613 (722,471)
----------- -----------
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD................ 132,565 800,256
----------- -----------
CASH & CASH EQUIVALENTS, END OF PERIOD...................... $ 859,178 $ 77,785
----------- -----------
----------- -----------
Cash Paid During the Period For Interest.................... $ 1,654,803 $ 1,601,896
Supplemental Schedule of Noncash Investing & Financing
Activities:
Inventory Leased to Customers and Reclassified to
Property.................................................. $ 1,167,094 $ 666,402
</TABLE>
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC. & SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION 9/30/97 12/31/96
--------- -----------
(UNAUDITED) (CONDENSED
FROM
AUDITED FINANCIAL
STMTS OF
SUNCOM
COMMUNICATIONS,
LLC)
<S> <C> <C>
ASSETS
Current Assets:
Cash & Cash Equivalents..................................... $ 859,178 $ 132,565
Accounts Receivable......................................... 1,175,259 839,442
Inventories................................................. 1,135,757 443,969
Prepaid Expenses & Other.................................... 254,149 124,372
----------- -----------
Total -- Current Assets..................................... 3,424,343 1,540,348
----------- -----------
Property -- Net............................................. 12,610,483 5,908,432
----------- -----------
Subscriber Contracts & Other Intangibles.................... 15,838,044 14,921,299
Notes Receivable............................................ 0 0
Goodwill.................................................... 12,386,845 653,666
Deposits & Other............................................ 30,819 80,349
----------- -----------
Total Other Assets.......................................... 28,255,708 15,655,314
----------- -----------
TOTAL....................................................... $44,290,534 $23,104,094
----------- -----------
----------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current -- Long Term Debt................................... $ 53,908 $ 1,400,000
Current Portion of Obligation Under Capital Leases.......... 14,976 68,420
Accounts Payable............................................ 2,259,586 1,257,974
Due to Officer.............................................. 414,475 0
Accrued Liabilities......................................... 1,011,034 406,871
Deferred Revenue............................................ 224,784 224,784
----------- -----------
Total Current Liabilities................................... 3,978,763 3,358,049
----------- -----------
Long-Term Debt.............................................. 25,552,321 12,600,000
----------- -----------
Subordinate Debt............................................ 4,750,000 4,584,146
----------- -----------
Obligations Under Capital Leases............................ 24,013 13,719
----------- -----------
Due to Officer.............................................. 828,951 0
----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock, $.25 par value 12,000,000 shares, authorized,
Preferred Stock, $.001 par value 1,000,000 shares,
authorized, 4,453,191 of Common Stock outstanding as of
September 30, 1997........................................ 1,113,298 0
Capital Contributed in Excess of Par Value.................. 9,784,576 0
Members Invest. & Contrib. Capital.......................... 0 3,943,646
Accumulated Deficit......................................... (1,741,388) (1,395,466)
----------- -----------
Stockholders' Equity........................................ 9,156,486 2,548,180
----------- -----------
TOTAL....................................................... $44,290,534 $23,104,094
----------- -----------
----------- -----------
</TABLE>
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying unaudited interim consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in the Company's 1996 Annual Report on Form 10-K. In the opinion
of management, all material adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included in
the accompanying unaudited interim consolidated financial statements. Operating
results for the nine months ended September 30, 1997, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997.
NOTE 2 - ACQUISITION
On May 30, 1997, the Company completed a business combination with Suncom
Communications L.L.C. a Delaware limited liability company. Under the terms of
the agreement, the Company, through its wholly owned subsidiary, Suncom, Inc.,
acquired the assets and business of Suncom, in exchange for which the Company
issued 2.1 million Common Shares to Suncom, which represented approximately
47.5% of the Company's outstanding Common Shares.
Also on May 30, 1997, Suncom consummated an agreement with A. J. Schell
acquiring substantially all of his equity position in the Company. As a result,
Suncom is the owner of 2,697,986 Common Shares, representing approximately 60.7%
of the outstanding Common Shares of the Company resulting in a reverse
acquisition.
The transaction has been accounted for as a reverse acquisition therefore the
financial statements presented herein represent the historical results of Suncom
and the results of operation of Audio Communications Network, Inc. from the date
of acquisition.
Assuming the reverse acquisition had occurred on January 1, 1996 the Company's
(unaudited) net revenues, net income (loss) per share, and earnings (loss) per
share would have been approximately as follows:
<TABLE>
<CAPTION>
3rd. Quarter First 9 Months
1997 1996 1997 1996
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net Revenue $5,615,003 $5,346,912 $15,966,204 $16,113,696
Net Income (Loss) $ (97,966) $ 350,322 $(1,103,061) $ 406,777
Earnings (Loss)
Per Share $ (.02) $ .12 $ (.23) $ .13
</TABLE>
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK & SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDING SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
CONTRIBUTED
ADDITIONAL CAPITAL
PAID-IN PF. RETAINED
COMMON STOCK AMOUNT INVESTMENTS CAPITAL WARRANTS EARNINGS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance 1/1/96 -0- -0- 3,750,000 -0- 193,646 (850,123)
Net Loss for the 12 mos. ending 12/31/96 -0- -0- -0- -0- -0- (545,343)
------------ --------- ----------- ---------- ----------- ----------
Balance 12/31/96 -0- -0- 3,750,000 -0- 193,646 (1,395,466)
------------ --------- ----------- ---------- ----------- ----------
------------ --------- ----------- ---------- ----------- ----------
Balance 1/1/97 -0- -0- 3,750,000 193,646 1,395,466)
Increase of Common Stock on Reverse
Acquisition on 5/30/97 with ACNI &
Suncom 2,100,000 525,000 (3,750,000) 4,565,662 (193,646) -0-
Common Shares Acquired on Reverse
Acquisition from ACNI 2,353,191 588,298 -0- 5,218,914 -0- -0-
Net Loss for the Period Ending 9/30/97 -0- -0- -0- -0- -0- (345,922)
------------ --------- ----------- ---------- ----------- ----------
Balance 9/30/97 4,453,191 1,113,298 -0- 9,784,576 -0- (1,741,388)
------------ --------- ----------- ---------- ----------- ----------
------------ --------- ----------- ---------- ----------- ----------
</TABLE>
<PAGE>
<PAGE>
PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS & RESULTS OF OPERATIONS
SUMMARY
The following table sets forth for the period indicated, certain items from the
Company's Consolidated statement of operations expressed as a percentage of
operating revenues.
<TABLE>
<CAPTION>
RELATIONSHIP TO TOTAL REVENUES
------------------------------------------
FOR THE PERIOD ENDING SEPTEMBER 30TH
------------------------------------------
THIRD QUARTER FIRST NINE MONTHS
----------------- ---------------------
1997 1996 1997 1996
------- ------ --------- --------
<S> <C> <C> <C> <C>
Revenues from Operations 100.0% 100.0% 100.0% 100.0%
Operating Costs and Expenses 67.4 51.9 65.5 61.6
------- ------ --------- --------
Income from Operations before Depreciation and Amortization 32.6 48.1 34.5 38.4
Depreciation and Amortization 21.0 22.8 22.1 22.8
------- ------ --------- --------
Income before Other Income (Expense), and Income Taxes 11.6 25.3 12.4 15.6
Other Income (Expense) Net 13.1 18.7 15.1 18.3
------- ------ --------- --------
Income before Income Taxes (1.5) 6.6 (2.7) (2.7)
Provision for Income Taxes 0.2 0.0 (0.1) 0.0
------- ------ --------- --------
Net Income (1.7) 6.6 (2.8) (2.7)
------- ------ --------- --------
------- ------ --------- --------
</TABLE>
<PAGE>
<PAGE>
PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On May 30, 1997, Audio Communications Network, Inc. acquired the assets of
Suncom Communications, L.L.C. ('Suncom acquisition') subject to the assumption
of $18.75 million of liabilities. In addition, the members of Suncom received
2,100,000 shares of Audio stock representing approximately 48% of the shares on
a fully diluted basis. In a separate transaction, the members of Suncom
purchased 597,698 shares of Audio Stock from Al Schell, President, CEO, and
Chairman of the Board. Suncom's franchise areas of operation include specified
areas in the states of North and South Carolina as well as Arizona. Suncom will
operate as a wholly owned subsidiary of Audio Communications Network, Inc.
The transaction has been accounted for as a reverse acquisition therefore
the financial statements presented herein represent the historical results of
Suncom and the results of operation of Audio Communications Network, Inc. from
the date of acquisition.
NET REVENUES:
Consolidated Net Revenues for the 3rd. Quarter of 1997 were $5,615,003
increasing over the comparable period of 1996 and the 2nd. Quarter of 1997 by
$3,032,347 or 117% and $2,098,806 or 60% respectively. The majority of the
increase over '96 and '97 is attributable to the reverse acquisition of ACN and
the balance to the growth in the Suncom franchises.
Overall, the Company's first 9 months of 1997 revenues of $11,793,626 as
compared to the first 9 months of 1996 revenues of $7,800,581 increased
<PAGE>
<PAGE>
$3,993,045. The majority of the increase is directly related to the reverse
acquisition of ACN with the remaining representing growth from the Suncom
franchises.
COST AND EXPENSES:
Cost and Expenses for the 3rd. Quarter of 1997 were $3,789,165 increasing
over the comparable period of 1996 and the 2nd. Quarter of 1997 by $2,451,069
and $1,461,000 respectively. The majority of the increase over '96 and `97 is
attributable to the reverse acquisition of ACN and the balance to the increase
operating expenses of the Suncom franchises. Overall, the Company's first 9
months of 1997 Costs and Expenses of $7,731,566 as compared to the first 9
months of 1996 $4,807,597 increased $2,923,969. The entire increase is directly
related to the reverse acquisition of ACN.
DEPRECIATION AND AMORTIZATION:
The increase in Depreciation and Amortization in the 3rd. Quarter of 1997
and the first 9 months of 1997 over like periods is due primarily to the assets
acquired in the reverse acquisition.
OTHER INCOME AND EXPENSE (NET):
The increase in Other Income and Expense (Net) in the 3rd Quarter of 1997
and the first 9 months of 1997 over their like periods is due primarily to the
additional senior and subordinated debt resulting from the reverse acquisition.
INCOME TAXES:
At September 30, 1997 the Company had operating loss carryforwards for
federal tax purchases of approximately $2,000,000. Such loss carryforwards
expire in 2004 through 2006.
<PAGE>
<PAGE>
NET INCOME/LOSS:
Net Loss for the Company's 3rd. Quarter of 1997 was $97,966 decreased from
a gain for the comparable period of 1996 of $170,667. The net loss for the 9
month period of 1997 was $345,922 compared to a loss for the comparable period
in 1996 of $219,755. The difference in operating results are primarily
attributable to the reverse acquisition of ACN.
LIQUIDITY AND CAPITAL RESOURCES:
Operating cash flows (computed as net income plus interest, taxes,
depreciation and amortization) for the first 9 months of 1997 have increased
from $2,992,984 in 1996 to $4,062,060 in 1997 an increase of $1,069,076 or 36%.
On May 30, 1997, in conjunction with the Suncom transaction, the Company
repaid all its bank debt obligations to SunTrust Bank, Central Florida, N.A. as
well as $18.75 million of debt obligations of Suncom and entered into a $32
million credit facility with PNC Bank with SunTrust and Lehman Brothers as
participating lenders in the facility. As of September 30, 1997 the Company had
an outstanding loan balance of $25.5 million and an unused credit facility of
$6.5 million. The credit facility is subject to various covenants including: (1)
Debt Service Coverage Ratio; (2) Debt to Cash Flow Ratio; and (3) Debt to
Minimum Monthly Recurring Billing Required.
In addition at that time, the Company and Midwest Mezzanine Fund entered
into a $4,750,000 subordinated debt agreement. The agreement requires the
Company to pay quarterly interest at a rate of 12.27%.
Audio Communications Network, Inc. was in compliance with all covenants at
September 30, 1997. All payments of interest and principal on loans outstanding
and payments on lease obligations have been made on a timely basis.
<PAGE>
<PAGE>
AUDIO COMMUNICATIONS NETWORK, INC. & SUBSIDIARIES
PART II OTHER INFORMATION
<TABLE>
<S> <C>
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
This item is not applicable. There have been no defaults in any of the Company's securities.
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS & REPORTS ON FORM 8K (17 CFR 249.308)
(a) (27) Financial Data Schedule
(b) Form 8K with respect to the Suncom/Audio transaction which closed May 3Oth was filed with the SEC on
June 16, 1997.
Amendment No. 1 to Form 8K submitting for filing certain exhibits relating to the Suncom/Audio
transaction was filed with the SEC on July 2, 1997.
Amendment No. 2 to the Form 8K with the pro forma balance sheet and Suncom financial information was
filed with the SEC on July 31, 1997.
</TABLE>
<PAGE>
<PAGE>
Form 10-QSB
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AUDIO COMMUNICATIONS NETWORK, INC.
(Registrant)
Date November 12, 1997 /s/ David W. Unger
----------------- ------------------------------
David W. Unger
Chief Financial Officer/
Executive Vice President
Date November 12, 1997 /s/ Mitchell Kleinhandler
----------------- -------------------------------
Mitchell Kleinhandler
President and
Chief Operating Officer
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- ------------- -------
<S> <C>
27 Financial Data Schedule
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Third
Quarter 10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 859,178
<SECURITIES> 0
<RECEIVABLES> 1,175,259
<ALLOWANCES> 0
<INVENTORY> 1,135,757
<CURRENT-ASSETS> 3,424,343
<PP&E> 18,730,534
<DEPRECIATION> 6,120,052
<TOTAL-ASSETS> 44,290,534
<CURRENT-LIABILITIES> 3,978,763
<BONDS> 0
<COMMON> 1,113,298
0
0
<OTHER-SE> 9,784,576
<TOTAL-LIABILITY-AND-EQUITY> 44,290,534
<SALES> 0
<TOTAL-REVENUES> 11,793,626
<CGS> 3,800,472
<TOTAL-COSTS> 10,338,544
<OTHER-EXPENSES> 401
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,816,991
<INCOME-PRETAX> (328,372)
<INCOME-TAX> 17,550
<INCOME-CONTINUING> (345,922)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (345,922)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
</TABLE>
