UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999.
Commission file number 0-11284
Z-Axis Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-0910490
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
of organization) Identification No.)
7395 East Orchard Road, Suite A-100
Greenwood, Colorado 80111-2509
- -------------------------------------------------------------------------------
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 713-0200
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 [ ]
The number of common shares outstanding as of September 30, 1999: 3,805,000
CONTENTS
PART I FINANCIAL STATEMENTS.
Item 1. Condensed Balance Sheets as of March 31, 1999
and September 30, 1999. 3
Condensed Statements of Operations,
three and six month periods ended
September 30, 1999 and 1998. 4
Condensed Statements of Cash Flows,
six month periods ended September 30, 1999 and 1998. 4
Notes to Condensed Financial Statements. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 6-19
PART II OTHER INFORMATION. 9-10
Item 1. Legal proceedings. 9
Item 2. Changes in securities. 9
Item 3. Defaults upon senior securities. 9
Item 4. Submission of matters to a vote of security holders. 10
Item 5. Other information. 10
Item 6. Exhibits and reports on Form 8-K. 10
SIGNATURES 10
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
<TABLE>
March 31, September 30,
1999 1999
(Audited) (Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash ............................................... $ 25,867 $ 28,065
Trade accounts receivable .......................... 925,249 697,363
Other current assets ............................... 50,796 22,774
------------ ------------
Total current assets ............................ 1,001,912 748,202
------------ ------------
Property and equipment, at cost ......................... 1,552,008 1,561,213
Accumulated depreciation ................................ (1,052,417) (1,194,374)
---------- ------------
Net property and equipment ...................... 499,591 366,839
Deferred income taxes ................................... 120,205 291,430
Capitalized software development costs, net.............. 132,906 125,916
Other assets ............................................ 10,712 10,722
------------ ------------
TOTAL ASSETS ....................................... $ 1,765,326 $ 1,543,109
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of Credit ..................................... 70,000 300,000
Accounts payable ................................... 102,788 91,565
Accrued expenses ................................... 160,143 141,827
Customer deposits .................................. 28,000 18,000
Current portion of long-term obligations............ 134,959 131,121
------------ ------------
Total current liabilities ....................... 495,890 682,513
Long-term obligations ................................... 131,102 67,699
Stockholders' equity:
Common stock ....................................... 3,805 3,805
Additional paid in capital ......................... 1,444,191 1,444,191
Retained earnings (deficit) ........................ (309,662) (655,099)
------------ ------------
Total stockholders' equity ...................... 1,138,334 792,897
TOTAL LIABILITIES AND EQUITY...... .................. $ 1,765,326 $ 1,543,109
============ ============
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
CONDENSED STATEMENTS OF OPERATIONS
Three Six
months ended months ended
September 30, September 30,
--------------------------------------------------------
1999 1998 1999 1998
(Unaudited) (Unaudited)
--------------------------- --------------------------
<S> <C> <C> <C> <C>
Net sales ....................... $ 671,215 $ 939,870 $ 1,222,247 $ 2,002,444
Operating expenses:
Production ................ 317,810 398,057 666,800 813,052
Research and development .. 27,930 72,533 63,229 116,450
General and administrative 183,843 183,949 365,893 379,257
Marketing ................. 224,889 201,710 469,363 444,456
Depreciation 72,888 65,570 149,956 124,518
Amortization of software
development costs ...... 1,691 -- 6,990 --
----------- ----------- ----------- -----------
Total operating expenses 829,051 921,819 1,722,231 1,877,733
----------- ----------- ----------- -----------
Income (loss) from operations ... (157,836) 18,051 (499,984) 124,711
Other (expense) income, net: .... (6,179) (8,944) (15,454) (16,112)
----------- ----------- ----------- -----------
Income (loss) before income taxes (164,015) 9,107 (515,438) 108,599
Income tax (expense) benefit .... 54,000 (3,400) 170,000 (36,100)
----------- ----------- ----------- -----------
Net Income (Loss) ............... $ (110,015) $ 5,707 $ (345,438) $ 72,499
=========== =========== =========== ===========
Income (loss) per common share
of stock:
Basic ...................... $ (0.03) $ 0.00 $ (0.09) $ 0.02
Diluted .................... (0.03) 0.00 (0.09) 0.02
=========== =========== =========== ===========
Weighted average number of
common shares outstanding
during the period
Basic ...................... 3,805,000 3,795,055 3,805,000 3,795,055
Diluted .................... 3,805,000 3,855,055 3,805,000 3,855,055
=========== =========== =========== ===========
</TABLE>
<PAGE>
CONDENSED STATEMENTS OF CASH FLOWS
Six months
ended September 30,
1999 1998
----------------------
(Unaudited)
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net cash provided by operations ............ $(144,087) $ 139,834
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .... (16,474) (78,446)
--------- ---------
Net cash used in investing activities ...... (16,474) (78,446)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit .......... 865,000 465,000
Payments on line of credit ............ (635,000) (605,000)
Debt and capital lease payments ........ (67,241) (43,224)
Proceeds from exercise of stock options 2,500
--------- --------
Net cash used in financing activities ...... 162,759 (180,724)
--------- --------
Net (decrease) increase in cash ............ 2,198 (119,336)
Cash , beginning of period ................. 25,867 139,254
--------- --------
Cash, end of period ........................ $ 28,065 $ 19,918
========= ========
See notes to condensed financial statements.
</TABLE>
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS.
NOTE 1. INTERIM FINANCIAL INFORMATION
The accompanying Condensed Balance Sheet at September 30, 1999, Condensed
Statements of Operations for the three and six month periods ended September 30,
1999 and 1998 and Cash Flows for the six month periods ended September 30, 1999
and 1998, should be read in conjunction with the Company's financial statements
and notes for the years ended March 31, 1999 and 1998. These condensed financial
statements contain all adjustments that management considers necessary for fair
presentation. Results for interim periods are not necessarily indicative of
results for a full year.
NOTE 2. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable consists of the following:
September
30,
1999
----------
Trade accounts receivable $ 742,280
Less allowance for bad debt 44,917
----------
Trade accounts receivable, net $ 697,363
----------
Approximately 19% and 31% of the Company's trade receivables were due from two
different customers at September 30, 1999.
NOTE 3. DEBT
Long-term debt consists of the following:
September
30,
1999
---------
Capital lease obligations $ 198,820
Less current portion 131,121
---------
Long term capital lease obligations $ 67,699
---------
The Company leases certain production and office equipment under the terms of
capital leases. The capitalized value of the leased equipment was approximately
$412,000 at September 30, 1999. The related accumulated depreciation was
approximately $235,000 at September 30, 1999. These amounts are combined with
similar equipment in the accompanying condensed financial statements. Lessors
have a security interest in all equipment classified as a capital lease.
The Company maintains a line of credit in the amount of $400,000 with a bank,
which matured August 1999. The bank granted an extension of the maturity date to
October 31, 1999. If drawn upon, the indebtedness bears interest at the bank's
prime rate plus two percent per annum (9.25% at September 30, 1999). The
Company's accounts receivable secure any amounts drawn under the line of credit.
As of September 30, 1999 the balance outstanding was $300,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The accompanying Condensed Balance Sheet as of March 31, 1999 and September 30,
1999 and Condensed Statements of Operations and Cash Flows for the three month
periods ended September 30, 1999 and 1998 should be read in conjunction with the
Company's financial statements and notes for the years ended March 31, 1999 and
1998. These condensed financial statements contain all adjustments that
management considers necessary for fair presentation. Results for interim
periods are not necessarily indicative of results for a full year. Except where
otherwise noted, references to periods are to periods of fiscal years ended
March 31 of the year stated.
FORWARD LOOKING STATEMENTS
In addition to the historical information, this 10-Q and Annual Report
incorporated by reference herein, contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and the Company
desires to take advantage of the "Safe Harbor" provisions thereof. Therefore,
the Company is including this statement for the express purpose of availing
itself of the protections of such Safe Harbor with respect to all of such
forward-looking statements. The forward-looking statements in this report
reflect the Company's current views with respect to future events and financial
uncertainties, including those discussed herein, that could cause actual results
to differ materially from historical results or those anticipated. In this
report, the words "anticipates", "believes", "expects", "intends", "future" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on the forward-looking statements contained herein,
which speak only as of the date hereof. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that may arise after the date of this report.
RESULTS OF OPERATIONS
NET SALES
Net sales for the three and six-month periods ended September 30, 1999 were
$671,215 and $1,222,247, respectively. Net sales for the corresponding periods
ended September 30, 1998 were $939,870 and $2,002,444, respectively. The
decrease in sales for the three and six-month periods ended September 30, 1999
as compared to the corresponding periods ended September 30, 1998 were 28% and
38% respectively. Management believes that the decrease in revenues was due to a
slow down in the general business services that support the litigation industry.
Management believes that this trend will likely continue into the third quarter
of the fiscal year. In order to mitigate the trend, management has taken steps
to increase closes on new jobs by focusing new sales consultants on in-trial
presentation management revenue opportunities with VuPoint and multimedia
technology. In addition, the marketing department is utilizing an electronic
system that tracks litigation activity to generate new leads for the core
business sales consultants. Cost management measures are also in place aimed at
decreasing overhead expenses, as well as effective utilization of contract labor
on revenue producing activities. Management believes that the sales and
marketing efforts, coupled with the cost reduction measures will lead to more
positive financial results in the fourth quarter of the fiscal year.
OPERATING INCOME AND EXPENSES
Loss from operations was $(157,836) and $(499,984) for the three and six-month
periods ended September 30, 1999. Income from operations was $18,051 and
$124,711 for the corresponding three and six-month period ended September 30,
1998. The decrease in operating income during the three and six-month periods
ended September 30, 1999 as compared to the same periods of fiscal 1998 was due
to the 28% and 38% decrease in revenues noted above. Corresponding operating
expenses decreased by 10% and 8% for the three and six-month periods ended
September 30, 1999 as compared to the three and six-month periods ended
September 30, 1998.
PRODUCTION EXPENSES
Production expenses were $317,810 and $666,800 for the three and six-month
periods ended September 30, 1999 as compared to $398,057 and 813,052 for the
three and six-month periods ended September 30, 1998. These results represent a
decrease of 20% and 17% for the three and six-month periods ended September 30,
1999 as compared to the same periods of the prior fiscal year. The decrease was
primarily due to the decrease in contract labor utilized for the period.
Production costs for direct contract labor and other billable expenses will vary
directly with sales levels. In addition, approximately $70,000 of production
expense was reclassified during the quarter ended September 30, 1999 to
marketing costs. This cost reclassification was done as a result of the
re-assignment of certain production personnel to a separate marketing effort
aimed at development of alternative markets into which the Company could
potentially sell animation and information consulting services.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses were $27,930 and $63,229 for the three and
six-month periods ended September 30, 1999 as compared to $72,533 and $116,450
for the three and six-month periods ended September 30, 1998. These results
represent a decrease of 61% and 45% for the three and six-month periods ended
September 30, 1999 as compared to the same periods of the prior fiscal year. In
the prior fiscal year, the majority of the research and development costs
incurred during the first and second quarters were capitalized under Financial
Accounting Standards Board Statement No.86 in the fourth quarter as the Company
determined that the costs incurred were associated with significant enhancements
that resulted in additional functionality of the product. The Company utilized
higher levels of labor to build these enhancements during fiscal year 1999. The
costs incurred for the first and second quarters of fiscal year 2000 are
expensed as these costs were for continued maintenance of the product and did
not require significant levels of labor. Research and development costs are
incurred as the Company continues to refine and enhance the VuPoint system.
Management considers VuPoint to have significant long-term revenue potential and
will continue further developments in the foreseeable future. Research and
development expenses are expected to continue at their current level throughout
the remaining quarters of the current fiscal year.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $183,843 and $365,893 for the three and
six-month periods ended September 30, 1999 as compared to $183,949 and $379,257
for the three and six-month periods ended September 30, 1998. These results
represent a change of less than 3% for the three and six-month periods ended
September 30, 1999 as compared to the same periods of the prior fiscal year. The
slight overall decrease is due to tighter management of general office
expenditures. General and administrative expenses are expected to remain at the
same level in the third quarter of fiscal 2000.
MARKETING EXPENSES
Marketing expenses were $224,889 and $469,363 for the three and six-month
periods ended September 30, 1999 as compared to $201,710 and $444,456 for the
three and six-month periods ended September 30, 1998. These results represent an
increase of 11% and 5% for the three and six-month periods ended September 30,
1999 as compared to the same periods of the prior fiscal year. The increase is
due to the reclassification of production costs as noted above. Marketing
expenses exclusive of the reclassification were $166,417 and $395,695 for the
three and six-month periods ended September 30, 1999. These results represent a
decrease of 17% and 10% for the three and six-month periods ended September 30,
1999. The decreases are a direct result of lower sales commissions due to lower
revenue levels. Management expects the marketing expenses to remain at the same
levels during the third quarter of fiscal 2000.
DEPRECIATION EXPENSE
Depreciation expenses were $72,888 and $149,956 for the three and six-month
periods ended September 30, 1999 as compared to $65,570 and $124,518 for the
three and six-month periods ended September 30, 1998. The increase is due to
additions to property and equipment in the amount of $316,611 during the fiscal
year ended March 31, 1999 as well as additions to property and equipment in the
amount of $16,474 during the six month period ended September 30, 1999.
AMORTIZATION OF PRIOR YEARS' SOFTWARE DEVELOPMENT COSTS
The increase in amortization costs was due to amortization of capitalized
software development costs related to VuPoint in the amount of $1,691 and $6,990
for the three and six-month periods ended September 30, 1999. These costs were
fully amortized in prior fiscal years; accordingly, no amortization costs were
recorded for the first and second quarters of fiscal year 1999.
OTHER EXPENSE
Other expense was $6,179 and $15,454 for the three and six-month periods ended
September 30, 1999 as compared to $8,944 and $16,112 for the three and six-month
periods ended September 30, 1998. The overall decrease of less than 1% in other
expenses for the six month period ended September 30, 1999 as compared to the
same period ended September 30, 1998 is due to lower interest costs as certain
debt obligations were paid down during the first and second quarters of fiscal
year 2000. This is offset by an increase in interest costs due to higher levels
of borrowing on the line of credit.
INCOME TAX EXPENSE
Income tax (expense)/benefit was $54,000 and $170,000 for the three and six
month periods ended September 30, 1999 as compared to $(3,400) and $(36,100) for
the three and six month periods ended September 30, 1998. The decrease in income
tax expense for the first two quarters of the current fiscal year is the result
of the decrease in income from operations noted above.
NET INCOME
Net loss and basic loss per share was $(110,015) and $(.03) for the three month
period ended September 30, 1999 and $(345,438) and $(.09) for the six month
period ended September 30, 1999. These results are compared to net income and
basic income per share of $5,707 and $.00 for the three month period ended
September 30, 1998 and $72,499 and $.02 for the six month period ended September
30, 1998. Diluted loss per common share was $(.03) and $(.09) for the three and
six month periods ended September 30, 1999 as compared to diluted income per
share of $.00 and $.02 for the three and six month periods ended September 30,
1998.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company's working capital position was $65,689, a
decrease of $124,777 during the current quarter. The decrease was due to the
lower receivables as a result of lower sales levels, coupled with higher
accounts payable, line of credit and accrued liabilities balances. Cash flow
from operations was $(144,087) for the six months ended September 30, 1999, as
compared to $139,834 for the six months ended September 30, 1998. The majority
of the Company's cash flow from operations during the first and second quarters
of fiscal 2000 was used to paydown the line of credit, purchase new equipment
and make normal payments on capital lease obligations. It is management's
opinion that through cash management and other measures, working capital for the
foreseeable future will be sufficient to meet operating requirements.
Capital additions were $2,970 and $16,474 during the three and six-month periods
ended September 30, 1999. These purchases were primarily for production and
office equipment.
Debt and capital lease payments were $(162,759) for the six-month period ended
September 30, 1999. Debt and capital lease payments are reported at net of
borrowings. The proceeds from borrowing during these periods were used for
financing normal operations and acquisition of new production equipment.
YEAR 2000 COMPLIANCE
GENERAL
Many older computer systems, software products and embedded chips that are in
use today were programmed to accept two digit entries in the date code field
(e.g. "98" for "1998"). These systems, software and embedded chips need to be
modified or upgraded to distinguish twenty-first century dates (e.g. "2002")
from twentieth century dates (e.g. "1902"), in order to avoid the possibility of
erroneous results or systems failures.
The Company's management has addressed potential Year 2000 compliance issues
relating to its 1) internal operating systems, 2) vendors, facilities and other
third parties and 3) software products that it licenses to customers. Management
believes that adequate resources have been allocated to this effort and expects
that any Year 2000 considerations will not materially impact the Company's
internal operations. Year 2000 considerations may have an affect on some of the
Company's customers and suppliers, and thus indirectly affect the Company.
CORPORATE INFRASTRUCTURE STATE OF READINESS
Management has addressed the Year 2000 issues with respect to the software
product ("VuPoint") which the Company licenses to existing and potential
customers. VuPoint currently is Year 2000 compliant and any modifications or
rewrites of the software code will be tested to be assured that they are also
Year 2000 compliant. Management has also evaluated the Company's internal
critical business systems that have date sensitivity. Any internal critical
business systems that are not Year 2000 compliant have been or will be replaced
or modified before their potential "failure date". Management has communicated
with major vendors, suppliers, landlords and other third parties regarding Year
2000 compliance of embedded processors in the Company's computers and
facilities, software and other information technology, and other products and
services which the Company obtains from third parties.
COSTS
In the course of normal business operations, the Company has incurred
approximately $110,000 in costs to replace and upgrade computer systems and
software programs that potentially were not Year 2000 compliant. Management
estimates that an additional $5,000 to $10,000 will need to be expended to
upgrade the remaining business systems that are not currently Year 2000
compliant. As a result of the expenditures already made, and those planned,
management is confident that all critical business systems that the Company
relies upon for operations are or will be Year 2000 compliant by the end of the
current calendar year.
RISKS
The VuPoint software that the Company intends to offer to its customers under
licensing arrangements, might contain undetected errors or failures when first
introduced or when new versions are released, even though the product is
intended to be Year 2000 compliant. While the Company has assessed, corrected
and tested VuPoint in regard to Year 2000 compliance, there can be no assurances
that the product or future releases of the product will not contain undetected
date sensitivity errors. If the Company is unable or is delayed in making the
necessary date code changes to VuPoint or future releases of the product, the
Company does not anticipate that there would be a material adverse effect upon
the Company's business, operating results, financial condition and cash flows.
There can be no assurances that the systems of other parties upon which the
Company relies will be made Year 2000 compliant on a timely basis. The Company
utilizes third party vendor equipment, telecommunications products, and software
products. Third parties' Year 2000 compliance efforts are not within the control
of the Company. The failure of any critical technology components to operate
properly may have a material impact on business operations or require the
Company to incur unanticipated expenses to remedy any problems.
The most substantial operational risks are those that are beyond the Company's
control including the progress of government agencies and compliance efforts of
utility companies. It is possible that interruptions in vital services due to
Year 2000 non-compliance will interfere with normal business operations. Such
failures could materially and adversely affect the Company's results of
operations.
Forward-looking statements contained in this Year 2000 Compliance disclosure
should be read in conjunction with the Company's disclosure under the heading of
Forward Looking Statements for the purposes of the Safe Harbor provisions of the
Private Securities Litigation Act of 1995.
<PAGE>
PART II OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders of the Corporation was held at the
corporate offices on September 17, 1999. The following individuals were elected
to serve as directors of the corporation:
NAME SHARES VOTED FOR SHARES VOTED "WITHHOLD AUTHORITY"
- ---------------------- ---------------- ---------------------------------
Steven H. Cohen 1,639,616 216,630
Alan Treibitz 1,639,616 216,630
Marilyn T. Heller 1,639,616 216,630
Marvin A. Davis 1,640,016 216,630
James E. Pacotti, Jr. 1,640,016 216,630
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No exhibits.
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Z-AXIS CORPORATION
BY: : /S/ ALAN TREIBITZ
____________________________
Alan Treibitz, President November 17, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/S/ STEVEN H.COHEN
____________________________________
Steven H. Cohen
Director, Chief Executive Officer November 17, 1999
/S/ ALAN TREIBITZ
____________________________________
Alan Treibitz
Director, President, Treasurer
Chief Financial Officer,
Principal Accounting Officer November 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-END> Sep-30-1999
<CASH> 28,065
<SECURITIES> 0
<RECEIVABLES> 742,280
<ALLOWANCES> 44,917
<INVENTORY> 0
<CURRENT-ASSETS> 748,202
<PP&E> 1,561,213
<DEPRECIATION> 1,194,374
<TOTAL-ASSETS> 1,543,109
<CURRENT-LIABILITIES> 682,513
<BONDS> 0
0
0
<COMMON> 3,805
<OTHER-SE> 789,092
<TOTAL-LIABILITY-AND-EQUITY> 792,897
<SALES> 1,222,247
<TOTAL-REVENUES> 1,222,247
<CGS> 0
<TOTAL-COSTS> 1,722,231
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,454
<INCOME-PRETAX> (515,483)
<INCOME-TAX> 170,000
<INCOME-CONTINUING> (345,438)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (345,438)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
