UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 number 0-11668
INRAD, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-2003247
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
181 Legrand Avenue, Northvale, NJ 07647
(Address of principal executive offices)
(Zip Code)
(201) 767-1910
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 of stock outstanding as of November 1, 1995:
2,106,571 shares
<PAGE>
INRAD, Inc.
INDEX
Page Number
-----------
Part I. FINANCIAL INFORMATION ..................................... 1
Item 1. Financial Statements
Consolidated Balance Sheet as of September
30, 1995 and December 31, 1994 (unaudited) .... 1
Consolidated Statement of Operations for the
Three and Nine Months Ended September 30,
1995 and 1994 (unaudited) ..................... 2
Consolidated Statement of Cash Flows for the
Nine Months Ended September 30, 1995 and
1994 (unaudited) .............................. 3
Notes to Consolidated Financial Statements .... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 8
Part II. OTHER INFORMATION ........................................ 12
Item 6. Exhibits and Reports on Form 8-K ...... 12
Signatures ......................................................... 13
<PAGE>
Item 1. FINANCIAL STATEMENTS
INRAD, Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 152,659 $ 119,718
Certificate of Deposit 70,000 70,000
Accounts receivable, net 678,408 609,155
Inventories 1,749,052 1,897,772
Plant and equipment held for sale 150,933 --
Unbilled contract costs 223,361 156,717
Other current assets 36,106 50,167
----------- -----------
Total current assets 3,060,519 2,903,529
Plant and equipment, net 2,121,239 2,742,531
Precious metals 283,307 311,797
Other assets 152,841 125,407
----------- -----------
Total assets $ 5,617,906 $ 6,083,264
=========== ===========
Liabilities and Shareowners' Equity
Current liabilities:
Note payable - Bank $ 60,000 $ 520,000
Current obligations under capital leases 203,388 311,199
Subordinated Convertible Notes 1,050,947 846,116
Demand Note 100,000 --
Accounts payable and accrued liabilities 699,122 625,452
Advances from customers 181,531 116,560
Other current liabilities 21,472 52,172
----------- -----------
Total current liabilities 2,316,460 2,471,499
Note Payable - Bank 335,000 --
Obligations under capital leases 122,861 183,632
Secured Promissory Notes 250,000 250,000
Note payable - Shareowner 525,262 500,788
----------- -----------
Total liabilities 3,549,583 3,405,919
----------- -----------
Shareowners' equity:
Common stock: $.01 par value;
2,121,571 shares issued 21,216 21,216
Capital in excess of par value 6,067,991 5,967,991
Accumulated deficit (3,952,884) (3,243,862)
----------- -----------
2,136,323 2,745,345
Less - Common stock in treasury,
at cost (15,000 shares) (68,000) (68,000)
----------- -----------
Total shareowners' equity 2,068,323 2,677,345
----------- -----------
Total liabilities and shareowners' equity $ 5,617,906 $ 6,083,264
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE>
INRAD, Inc.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------- --------------------------
1995 1994* 1995 1994*
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Net product sales $ 1,079,249 $ 1,229,194 $ 3,117,913 $ 3,960,830
Contract research and
development 225,535 315,823 888,934 757,391
----------- ----------- ----------- -----------
1,304,784 1,545,017 4,006,847 4,718,221
----------- ----------- ----------- -----------
Costs and expenses:
Cost of goods sold 923,303 976,307 2,666,361 3,010,049
Contract research and development
expenses 221,871 314,271 870,332 733,735
Selling, general and administrative
expenses 243,584 264,375 733,556 865,695
Internal research and development
expenses 56,392 127,818 247,816 259,312
----------- ----------- ----------- -----------
1,445,150 1,682,771 4,518,065 4,868,791
----------- ----------- ----------- -----------
Operating profit (loss) (140,366) (137,754) (511,218) (150,570)
Other income (expense):
Interest expense (63,172) (81,009) (211,156) (252,757)
Interest and other income, net 6,602 952 13,352 10,513
----------- ----------- ----------- -----------
Net income (loss) (196,936) (217,811) (709,022) (392,814)
Accumulated deficit, beginning of period (3,755,948) (2,545,471) (3,243,862) (2,370,468)
----------- ----------- ----------- -----------
Accumulated deficit, end of period $(3,952,884) $(2,763,282) $(3,952,884) $(2,763,282)
=========== =========== =========== ===========
Net income (loss) per share $ (0.09) $ (0.10) $ (0.34) $ (0.19)
=========== =========== =========== ===========
Weighted average shares outstanding 2,106,571 2,106,571 2,106,571 2,106,571
=========== =========== =========== ===========
- ----------------
* Prior year amounts have been reclassified to conform to current year presentation.
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE>
INRAD, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
----------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $(709,022) $(392,814)
--------- ---------
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization 564,432 528,798
Noncash interest expense 104,305 93,522
Changes in assets and liabilities:
Accounts receivable (69,253) 148,715
Inventories 148,720 5,967
Unbilled contract costs (66,644) 15,540
Other current assets 14,061 8,133
Precious metals 28,490 726
Other assets (29,124) (5,900)
Accounts payable and accrued liabilities 73,670 (129,672)
Advances from customers 64,971 (23,092)
Other current liabilities (30,700) (1,249)
--------- ---------
Total adjustments 802,928 641,488
--------- ---------
Net cash provided by operating activities 93,906 248,674
--------- ---------
Cash flows from investing activities:
Capital expenditures (140,308) (137,375)
Proceeds from sale of equipment 47,925 --
--------- ---------
Net cash (used in) investing activities (92,383) (137,375)
--------- ---------
Cash flows from financing activities:
Principal payments of note payable - Bank (125,000) (185,000)
Principal payments of capital lease
obligations (168,582) (210,486)
Proceeds from Demand Note 100,000 --
Proceeds from sale of Common Stock Warrants 100,000 --
Proceeds from issuance of Subordinated
Convertible Note 125,000 --
--------- ---------
Net cash provided by (used in) financing
activities 31,418 (395,486)
--------- ---------
Net increase (decrease) in cash and cash equivalents 32,941 (284,187)
Cash and cash equivalents at beginning of period 119,718 560,703
--------- ---------
Cash and cash equivalents at end of period $ 152,659 $ 276,516
========= =========
See Notes to Consolidated Financial Statements.
3
<PAGE>
INRAD, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of INRAD,
Inc. (the "Company") reflect all adjustments, which are of a normal recurring
nature, and disclosures which, in the opinion of management, are necessary for a
fair statement of results for the interim periods. It is suggested that these
consolidated financial statements be read in conjunction with the audited
consolidated financial statements as of December 31, 1994 and 1993 and for the
years then ended and notes thereto included in the Registrant's Annual Report on
Form 10-K, filed with the Securities and Exchange Commission.
Inventory Valuation
Interim inventories as well as cost of goods sold are computed by using the
gross profit method of interim inventory valuation and applying an estimated
gross profit percentage based on the actual values for the preceding fiscal
year, unless the company believes that a different gross profit percentage may
more accurately reflect its current year's cost of goods sold and gross profit.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. Deferred tax assets and liabilities are
determined based on the difference between the financial statement carrying
amounts and the tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.
Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number of
common shares outstanding. The effect of common stock equivalents has been
excluded from the computation because their effect is antidilutive.
4
<PAGE>
NOTE 2 - INVENTORIES AND COST OF GOODS SOLD
For the nine month period ended September 30, 1995, the Company used 85.5% as
its estimated cost of goods sold percentage. For the previous year, 1994, the
actual cost of goods sold percentage, after reclassification of allocated
overhead costs from internal R&D expense to cost of goods sold, was 82.6% (see
Note 5). During the third quarter of 1995, the Company continued to operate at
less than full capacity. The cost of goods sold percentage utilized is now
expected to be representative of the annual percentage, based on actual
year-to-date results and management's estimate of fourth quarter revenues and
expenses. For the nine month period ended September 30, 1994, the Company used
76.0% (after reclassification of allocated overhead costs) as its estimated cost
of goods sold percentage.
NOTE 3 - INCOME TAXES
Deferred tax assets (liabilities) comprise the following:
September 30, December 31,
1995 1994
------------- ------------
Deferred tax assets
Inventory capitalization adjustment $ 75,000 $ 73,000
Inventory reserves 4,000 4,000
Vacation liabilities 60,000 62,000
Loss carryforwards 2,307,000 2,046,000
----------- -----------
Gross deferred tax assets 2,446,000 2,185,000
----------- -----------
Deferred tax liabilities
Depreciation (363,000) (375,000)
----------- -----------
Gross deferred tax liabilities (363,000) (375,000)
----------- -----------
2,083,000 1,810,000
Valuation allowance (2,083,000) (1,810,000)
----------- -----------
Net deferred tax assets $ 0 $ 0
=========== ===========
5
<PAGE>
NOTE 4 - DEBT
On August 31, 1995, the Company signed an agreement with Chemical Bank amending
the terms of its credit facility. The new agreement requires monthly principal
payments of $5,000 from September 1995 to December 1996, and monthly principal
payments of $10,000 thereafter until March 1998. A final payment of $170,000 is
due on April 1, 1998. Borrowings bear interest at prime+2 1/4%. The agreement
also amended the financial covenants contained in the original agreement.
Chemical Bank also agreed to waive any defaults which existed under the previous
facility.
In connection with the new agreement, a shareowner and Subordinated Convertible
Note holder agreed to maintain a certificate of deposit with Chemical Bank in
the amount of $245,000 as collateral for the loan. Once the principal balance of
the loan is reduced below $245,000, with each principal payment made by the
Company, a like amount may be withdrawn from the collateral deposit.
At September 30, 1995 and as of December 31 1994, the Company was in default of
its debt agreements with the holders of the Subordinated Convertible Notes, and
all amounts payable under such agreements have been classified as current
liabilities. Management intends to seek appropriate waivers from the holders of
the Subordinated Convertible Notes, although there can be no assurance that the
Company can obtain such waivers. Any such failure to obtain covenant relief
would result in a default under the terms of the Notes, and, if the indebtedness
was accelerated by the holders of the Notes, would therefore cause a default
under the terms of the Company's Bank indebtedness.
In April 1995, the Company received $225,000 from a shareowner and Subordinated
Convertible Note holder of the Company through the issuance of $125,000 of 8%
Subordinated Convertible Notes due December 15, 2000 (convertible at $1.00 per
share) and 250,000 warrants at $0.40 per share. The warrants entitle the holder
to purchase 250,000 shares of Common Stock at $0.6875 per share. On September
27, 1995, the Company raised an additional $100,000 from the same shareowner in
the form of a 10% Unsecured Demand Promissory Note. The Note is convertible into
Common Stock of the Company at the conversion price of $1.00; interest is also
payable in Common Stock at the same conversion price.
The Company is attempting to renegotiate the terms of certain of its existing
equipment lease obligations, so as to modify the payment stream to reduce the
current payment requirements. There is no assurance that the Company will be
able to execute a satisfactory renegotiation of its current lease agreements.
The Company does not anticipate a material gain or loss to result from the
renegotiation of its lease obligations.
By mutual informal agreement, beginning with the quarter ended June 30, 1995,
the Company has deferred interest payments to its principal shareowner. The
payments are expected to be resumed in 1996, and are expected to include both
the scheduled quarterly payment and any deferred payments. The interest
obligations have been accrued by the Company and are included in accounts
payable and accrued liabilities.
6
<PAGE>
NOTE 5 - RECLASSIFICATION RELATING TO INTERNAL RESEARCH AND
DEVELOPMENT
Prior to January 1, 1995, internal research and development costs included
direct charges and allocations of plant overhead costs. Effective January 1,
1995, the Company modified its reporting to charge allocations of plant overhead
costs directly to cost of goods sold. This reclassification has no effect on
operating profit (loss) or net income (loss).
NOTE 6 - PLANT AND EQUIPMENT HELD FOR SALE
Management has implemented a program to sell certain nonoperating equipment to
raise additional cash. The equipment is carried at net book value, which
approximates realizable value. The equipment has been classified as a current
asset because management expects the equipment to be sold within the next year.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements presented elsewhere
herein. The discussion of results should not be construed to imply any
conclusion that such results will necessarily continue in the future.
Net Product Sales
Net sales for the third quarter of 1995 decreased $150,000, or 12%, from the
comparable quarter in 1994, and net sales for the nine months ended September
30, 1995 decreased $843,000, or 21%, from the comparable 1994 period.
International shipments in the first nine months of 1995 were $540,000, compared
to $977,000 for the first nine months of 1994. Product sales were lower in 1995
compared to 1994 due primarily to lower bookings and a lower backlog.
International shipments represented 17% of total shipments for the first nine
months of 1995, compared to 25% for the comparable 1994 period.
The backlog of unfilled product orders was $1,441,000 at September 30, 1995,
compared with $1,116,000 at December 31, 1994 and $1,196,000 at September 30,
1994.
Cost of Goods Sold
For the nine month period ended September 30, 1995, the Company used 85.5% as
its estimated cost of goods sold percentage. For the previous year, 1994, the
actual cost of goods sold percentage, after reclassification of allocated
overhead costs from internal R&D expense to cost of goods sold, was 82.6% (see
Note 5). During the third quarter of 1995, the Company continued to operate at
less than full capacity. The cost of goods sold percentage utilized is now
expected to be representative of the annual percentage, based on actual
year-to-date results and management's estimate of fourth quarter revenues and
expenses.
For the nine month period ended September 30, 1994, the Company used 76.0%
(after reclassification of allocated overhead costs) as its estimated cost of
goods sold percentage.
Contract Research and Development
Contract research and development revenues for the third quarter of 1995
decreased $90,000, or 29%, from the comparable quarter in 1994, and revenues for
the nine months ended September 30, 1995 and 1994 were $889,000 and $757,000,
respectively. Related contract research and development expenditures, including
allocated indirect costs, for the quarter ended September 30, 1995 were $222,000
compared to $314,000 for the comparable 1994 quarter, and expenses for the nine
month period ended September 30, 1995 and 1994 were $870,000 and $734,000,
respectively.
The Company's backlog of contract R&D was $627,000 at September 30, 1995,
compared with $1,223,000 at December 31, 1994 and $2,292,000 at September 30,
1994. The Company expects to reduce its future emphasis on funded research; as a
8
<PAGE>
result, bookings of new contracts is expected to decrease. This change in
emphasis will also result in lower contract revenues and expenses in future
quarters.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $21,000, or 8%, in the
third quarter of 1995, and $132,000, or 15%, for the nine months ended September
30, 1995 compared to the same period in 1994. The decrease is due primarily to
lower selling commissions on international sales, a higher allocation of general
and administrative costs to contract research, and cost containment efforts by
the Company in the administrative and support areas.
The Company's anticipated future reduction in funded research programs is
expected to result in a lower allocation of G&A costs to contracts. The lower
allocation, which would result in higher net G&A costs, is expected to be
partially offset by cost reductions.
As the Company continues to implement its sales and marketing strategy, selling
expenses are expected to increase in the fourth quarter of 1995 and future
quarters in 1996.
Internal Research and Development Expenses
Internal research and development expenses for the quarter ended September 30,
1995, were $56,000 compared to $128,000 (as reclassified, Note 5) for the
quarter ended September 30, 1994. Expenses for the nine month period ended
September 30, 1995 were $248,000, compared to $259,000 (as reclassified) for the
comparable 1994 period. During 1995, R&D expenses have decreased each quarter as
the Company decreased its emphasis on development of new products and increased
its short-term efforts on sales and marketing of existing products. This trend
is expected to continue in the fourth quarter of 1995.
Interest Expense
Interest expense decreased by $18,000, or 22%, in the third quarter, and
decreased $42,000, or 16%, for the nine months ended September 30, 1995. The
decrease is due primarily to lower amounts of bank and lease borrowings.
Inflation
The Company's policy is to periodically review its pricing of standard products
to keep pace with current costs. As to special and long term contracts,
management endeavors to take potential inflation into account in pricing
decisions. The impact of inflation on the Company's business has not been
material to date.
9
<PAGE>
Liquidity and Capital Resources
As shown on the accompanying financial statements, the Company reported a net
loss of approximately $709,000 for the nine month period ended September 30,
1995, and also incurred losses in 1994, 1993, and 1992. During the past three
years, the Company's working capital requirements were met principally by cash
provided by operating activities, unsecured loans from its principal shareowner,
and borrowings from other sources.
On August 31, 1995, the Company signed an agreement with Chemical Bank amending
the terms of its credit facility. The new agreement requires monthly principal
payments of $5,000 from September 1995 to December 1996, and monthly principal
payments of $10,000 thereafter until March 1998. A final payment of $170,000 is
due on April 1, 1998. The agreement also amended the financial covenants
contained in the original agreement. Chemical Bank also agreed to waive any
defaults which existed under the previous facility.
In connection with the new agreement, a shareowner and Subordinated Convertible
Note holder agreed to maintain a certificate of deposit in the amount of
$245,000 as collateral for the loan. Once the principal balance of the loan is
reduced below $245,000, with each principal payment made by the Company, a like
amount may be withdrawn from the collateral deposit.
In April 1995, the Company received $225,000 from a shareowner and Subordinated
Convertible Note holder of the Company through the issuance of $125,000 of 8%
Subordinated Convertible Notes due December 15, 2000 (convertible at $1.00 per
share) and 250,000 warrants at $0.40 per share. The warrants entitle the holder
to purchase 250,000 shares of Common Stock at $0.6875 per share. On September
27, 1995, the Company raised an additional $100,000 from the same shareowner in
the form of a 10% Unsecured Demand Promissory Note. The Note is convertible into
Common Stock of the Company at the conversion price of $1.00; interest is also
payable in Common Stock at the same conversion price. The proceeds from both
transactions were used to pay trade debt and other operating expenses.
At September 30, 1995 and as of December 31 1994, the Company was in default of
its debt agreements with the holders of the Subordinated Convertible Notes, and
all amounts payable under such agreements have been classified as current
liabilities. Management intends to seek appropriate waivers from the holders of
the Subordinated Convertible Notes, although there can be no assurance that the
Company can obtain such waivers. Any such failure to obtain covenant relief
would result in a default under the terms of the Notes, and, if the indebtedness
was accelerated by the holders of the Notes, would therefore cause a default
under the terms of the Company's Bank indebtedness.
As a result of the new Chemical Bank agreement, the Company's monthly principal
payment requirement was reduced by $10,000. It is also expected that
renegotiation of the equipment leases will result in a reduction of the total
monthly lease payments by $5,000-$10,000. The Company has also continued to make
reductions where possible in other operating expenses. The Company has also
identified certain non-operating assets which it intends to sell to generate
additional cash flows. These steps were taken to reduce the Company's short-term
cash requirements until operating cash flow improves.
10
<PAGE>
Until cash flow from operations is at satisfactory levels, the Company intends
to seek additional financing from other sources to supplement its cash flow. If
management is unable to obtain waivers from the holders of the Subordinated
Convertible Notes or obtain additional financing, the Company may find it
necessary to dispose of additional assets.
Due to the circumstances described above relating to the technical defaults
under its debt agreements with the holders of the Subordinated Convertible
Notes, obtaining financing or disposing of certain assets, and the Company's
ability to improve operating results and cash flows, there is substantial doubt
about the Company's ability to continue as a going concern.
Capital expenditures, including internal labor and overhead charges, were
approximately $140,000 and $137,000 for the nine months ended September 30, 1995
and 1994, respectively. Until the Company is generating satisfactory amounts of
cash flow from its operations, it is expected that future capital expenditures
will be kept to a minimum. Management believes that in the short term, this
limitation will not have a material effect on operations.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibit 11. An exhibit showing the computation of per-share earnings is
omitted because the computation can be clearly determined from the material
contained in this Quarterly Report on Form 10-Q.
(B) There were no Current Reports on Form 8-K filed by the Registrant during the
quarter ended September 30, 1995.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INRAD, Inc.
By: /s/ Warren Ruderman
-------------------------
Warren Ruderman
President and Chief Executive Officer
By: /s/ Ronald Tassello
-------------------------
Ronald Tassello
Vice President, Finance
(Chief Accounting Officer)
Date: November 13, 1995
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS, AND THE CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<PERIOD-END> SEP-30-1995
<FISCAL-YEAR-END> DEC-31-1995
<CASH> 152,659
<SECURITIES> 0
<RECEIVABLES> 678,408
<ALLOWANCES> 0
<INVENTORY> 1,749,052
<CURRENT-ASSETS> 3,060,519
<PP&E> 2,121,239
<DEPRECIATION> 564,432
<TOTAL-ASSETS> 5,617,906
<CURRENT-LIABILITIES> 2,316,460
<BONDS> 0
<COMMON> 21,216
0
0
<OTHER-SE> 2,047,107
<TOTAL-LIABILITY-AND-EQUITY> 5,617,906
<SALES> 4,006,847
<TOTAL-REVENUES> 4,006,847
<CGS> 3,536,693
<TOTAL-COSTS> 3,536,693
<OTHER-EXPENSES> 981,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 197,804
<INCOME-PRETAX> (709,022)
<INCOME-TAX> 0
<INCOME-CONTINUING> (709,022)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (709,022)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> 0
</TABLE>
